sales tax

[Ken]

I am doing a persons taxes whos is in the Military and I would like a little opinion from the rest of you.

I happen to know this individual and I know he joined the army from here (Arizona).

He has been stationed in various places but wound up back here for awhile.

One of my concerns is that he now "claims" Alaska as his home state ( I think because they have no state tax, plus residents get some sort of money from the state just for being a resident of that state.

The w-2 forms lists Alaska as the state of record so I guess I'll just go along with that part of it although I dont really think he has done anything to really establish Alaska as his home of record. Apparently all you have to do is tell the military you want to be an alaskan and you are one.

Now for the other problem since Alaska has no state tax, I was going to use the sales tax table for deducting state tax. He has been in Arizona for at least a year so do I use Arizona, where he is actually paying sales tax? or Alaska where he claims as his state of record.

I have already done the taxes and I used Arizona. Now I would like your opinions on which state YOU would use.

Thanks Ken

[Brian EA]

Sales Tax

Let's assume that you do not know the guy. His default state is Alaska so I would have used Alaska.

[Ken]

sales tax

Yes that would be alright BUT he also told me he lived in Arizona the past 12 months. Why would he use Alaska if he is actually living and purchasing things in Arizona?
Thats why I am having a problem with this. It has to make sense to me and this just doesn't.

[rosieea]

What address is being used on his tax return?

[Ken]

sales tax

well he is stationed here in Arizona and so his address is here in Arizona. He even has a home here. Just his w-2 forms say Alaska.

[Bill Tubbs]

Where does he live?

He lives in Arizona, so I would use the Arizona table (even though he's still a resident of Alaska). 2 reasons:
1) it would seem to make sense -- he's living in Arizona so everything he's buying is subject to Arizona sales tax, not Alaska
2) the instructions for Sch A keep referring to where you lived -- not where you are a resident of

Bill

[Ken]

thanks Bill

Thats what I thought too.
Ken

[Ann Von Hagel]

military and state taxation

I do a LOT of military returns and my husband is Retired Navy. Active duty military persons are considered resident of the state they 'belong to' when they join the military. However, they get orders and stationed to new places every 2 or 3 years on a "permanent" basis. They may choose to become resident of any state they are "permanently stationed" in. It's an internal personnel issue; they are supposed to show some sort of intent to return to that state at the end of their obligated service and the change is made. So most military people you will meet will be 'resident' of states with no income tax or who have preferential tax treatment of military members.

That being said, when it comes to the sales tax deduction, you should use the place they physically were. You can also add in, for purposes of calculating the sales tax deduction, the amount of non-taxable earned income they have. This would be any amount with a 'Q' code in box 12 (generally combat zone pay) as well as any amount shown on their LES -- their "leave and earnings statement" for BAS or BAH. These are basic allowances for Subsistence and Housing.

Ann Von Hagel, EA
Arlington, VA