The Military Spouses Residency Relief Act: What You Should Know
by Rebecca Alwine - August 9th, 2022
Life as a military spouse can get complicated. Sometimes answers to simple questions such as where you live, vote, or pay taxes can be problematic. Thankfully, the Military Spouses Residency Relief Act exists to make life a little easier. The law allows military spouses to maintain the same home of record throughout their military member's career. But it's not as easy as it sounds.
What is a home of record for military families?
A service member’s “home of record” is the state from which they joined the military. This can never be changed, but their state of residency can. As spouses, we don’t have a “home of record,” but we do have a state of residency. Usually, it’s where we vote. Sometimes, it’s where we own property.
As a spouse, you have to establish your state of residency. It’s more than just choosing a state. A spouse doesn’t just assume the military member’s state of residency by getting married. You must establish yourself by actions such as registering to vote or obtaining a driver’s license in that state.
What applies to me?
An unfortunate part of moving from state to state, and sometimes out of the country, is that each state has its own rules on what you have to do when relocating there. The response, “I’m a military spouse, so that doesn’t apply to me,” isn’t an option.
The Military Spouses Residency Relief Act
The Military Spouses Residency Relief Act (MSRRA) protects military spouses facing issues related to military moving. On Veterans Day 2009, President Barack Obama signed MSRRA into law. Milspouses everywhere celebrated, but many didn’t fully understand MSRRA. The generic description says the MSRRA “will ensure that the spouses of military personnel who move because their spouse is posted for military duty will be treated as not having changed residency for tax purposes.”
Eligibility for Military Spouses Residency Relief Act
This issue is not as cut and dry as it seems. Military spouses still have to meet specific qualifications. Here are the eligibility factors for the Military Spouses Residency Relief Act:
Live in the state on military orders
Reside in a state different from the state of your domicile
Reside in the state solely to live with your service member
Your service member must live in this state with you (deployment or TDY does not make you ineligible)
Also, in some states, you must also claim the same domicile as your active duty service member. That makes perfect sense, right?
What does the MSRRA do for military spouses, exactly?
As a military spouse, one of the biggest advantages of the MSRRA is the simplicity of filing taxes, not changing your voter registration, and also keeping your driver’s license the same. Some other benefits (depending on the state) include:
Not filing multiple part-year and nonresident income tax returns – less paperwork, yay!
Potentially exempt from personal property taxes like vehicle registration fees if the military spouse is living with their service member in a state that is not their domicile.
Check with your state
Though the intention of the MSRRA was to simplify life for military families, it doesn't always meet that goal. If you have questions (and we're guessing you do), it's best to check your state's specific MSRRA requirements.
For instance, take the application for the Military Spouses Residency Relief Act in North Carolina. The Tar Heel state waives the required payment of income tax for service member spouses stationed within the state if all three of the following are met:
The service member is only in North Carolina because of military orders
The spouse is only in North Carolina to live with their service member
The spouse is domiciled in the same state as the service member (i.e., you both have the same state of residency, and it is not North Carolina)
Hawaii has the same rules. In fact, a lot of states follow these rules, which makes them pretty easy to remember.
There are always exceptions
South Carolina, for example, does not require both people to have the same state of residence. But Georgia does. So, if you’re heading to Fort Gordon and you’re considering housing, keep that in mind.
Taxes and the Military Spouses Residency Relief Act
Remember, if you are enjoying the protection of MSRRA to avoid paying taxes in the state you are stationed in, you still have to pay taxes in the state where you claim residence (if they have an income tax). So, those who claim Texas - a state without income tax - as their state of residence, there will not be any income tax due. However, if you live in a state like Virginia, you will have to pay state taxes.
MSRRA does not eliminate your tax responsibility completely; it is there to make things easier.
Factors to consider when choosing a legal residence
There are several factors to consider when deciding between the state you currently live in or your spouse’s legal residence*
State tax rate
College tuition/saving plans
Vehicle and property insurance
Estate planning and wills
Milspouse professional licenses
*with established residency
What you can't do under the MSRRA
Of course, there are limitations to this law, as you might expect. And remember, these vary state to state, so do your specific state research.
You cannot choose a random state to be your residence. You also can’t “adopt” your service member’s state without having lived there. If a state exempts military income while the service member is on orders, that is not automatically extended to income earned by the military spouse. Also, you have to be able to prove that you have lived there. It’s all clear as mud, right?
Some helpful tips for figuring out your state residency
If you're still having trouble understanding where you can and cannot claim residency, answer these questions:
Did you live in the state before marriage?
Did you live there with your spouse since being married?
If you answered yes, you can probably claim that as your domicile.
Remember, we are not attorneys, we are not tax accountants, and we are not providing you with legal advice! As always, head to JAG or consult an attorney before making any official decisions.
PCSgrades.com is a community of military and veteran families helping each other with our biggest relocation needs through trusted reviews. Help us to help each other and submit your reviews today. Together we can make a difference!