MSRRA: Income Tax Help for Military Spouses

By Meghan Northcutt, AFC ® Candidate

I’ve been a military spouse for over three and a half years. In that time, I’ve learned a lot and seen a lot. One thing I see time and time again is military spouses not knowing about the Military Spouse Residency Relief Act (MSRRA). I was talking with a friend once, and I found out she was paying income taxes in three different states. It boggled my mind! I do not want anybody else to be in that situation. Let me show you how the MSRRA has helped me.

My husband and I are Missouri residents, but the Air Force sent us to Mississippi. I was employed in Mississippi and filed the appropriate MSRRA tax exemption forms obtained through the Legal Office; my employer withheld federal taxes as needed and exempted me from paying local state income tax. I used Missouri’s state income tax information to set aside my tax money into a separate account until I used it when filing my state taxes. I paid my state income taxes to Missouri, as I meet the requirements to legally hold my residency within the state. I did not have to pay any income taxes to the state of Mississippi regardless of my employment within the state. Essentially, I saved money by not paying multiple states! This allows me to save extra money each month to put toward my financial goals.

How can you receive the same benefits?

In 2009, the Military Spouse Residency Relief Act (MSRRA) was established to keep one state of legal residency for military spouses. Regardless of what state a military spouse actually resides in due to military orders, they are able to file state income taxes within their legal state of residency. JAG for the United States Navy defines a military spouse’s legal residence, or domicile, as “the place where one has lived and formed the intent to remain for the indefinite future and return when temporarily absent.” Where a military spouse votes, holds professional licenses, registers vehicles, holds a driver’s license, or owns property may be an indication of which state is considered the legal residence.

Military spouses must meet certain criteria in order for the MSRRA protections to take effect. First, the military spouse must reside in a state other than their state of legal residency. Second, they must reside in that state only due to military orders. Third, they must reside with their serving spouse. Lastly, many states require the servicemember and military spouse to claim the same state of legal residency. Upon divorce, separation from the military, voluntary geo-baching, or establishing a new state of residency, the military spouse will no longer be offered protection under the MSRRA. During TDYs, deployments, or unaccompanied orders, the military spouse will remain protected. If there are questions regarding legal state of residency or eligibility criteria, contact Legal or JAG at your installation to schedule an appointment with an Attorney.

Ingram Financial Management has a very detailed list describing how to file the exemption for each state. Certain forms are required to be submitted for individual states, and you may consider contacting your employer regarding your exemption so they no longer withhold state income taxes.

In a nut shell, what do you need to do?

Review your state’s requirements for the MSRRA. Verify that you meet the eligibility requirements, and confirm that all documents needed for form submission are together. Contact your employer to request state income tax exemption so you can withhold for your state as necessary. If you need assistance along the way, visit the JAG or Legal Office on your installation. Start saving toward your financial goals!

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