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NEWS | March 15, 2011

Military Spouses Residency Relief Act

By Joint Base Charleston Judge Advocate General

The Military Spouses Residency Relief Act changes the basic rules of taxation with respect to military spouses who earn income from services performed in a state in which the spouse is present with the service member in compliance with military orders when that state is not the spouse's domicile (legal residence). Under these conditions, the spouse generally will not have to pay income taxes to the current state where income is earned. The spouse however, would be required to pay income tax to the domiciliary state (assuming that state taxes wages). There may be some confusion regarding domicile or legal residence. The most commonly asked question during legal assistance is what is domicile?  It is the place one considers "home," where one has been physically present and formed the intent to remain for the indefinite future and return when temporarily absent.

Under this Act, military spouses will not lose the right to vote or right to register to vote in a state as a result of a military move. They could decide to register to vote at their new location, or they could keep their voting registration in the old state, even if they don't plan to return. Another benefit is a spouse will not have to change a driver's license or auto registration when moving in and out of states.

Regarding taxes, a spouse will neither lose nor acquire a residence for tax purposes by entering or leaving a tax jurisdiction while accompanying a service member who is moving as a result of military orders. This applies to income taxes and personal property taxes. In some cases, this means couples no longer will need to hire accountants specifically to work out paying income taxes or property taxes in multiple states.

The spouse of a service member is exempt from income taxation by said state when he or she:

- Currently resides in a state different than the state of his or her domicile.
- Resides in the state solely in order to live with the service member.
- The service member is present in the state in compliance with military orders.

The entire law can be viewed at http://www.govtrack.us/congress/billtext.xpd?bill=s111-475.