Military pay

[Redneck]

This is for years 2007 and 2008

Taxpayer on active duty in military.

Tp and spouse reside in state A.

Tp stationed in state B.

Tp military state home of record state C.

Spouse works and has resided all of her life in state A.

Military pay for state home C is non taxable because income was not made in state C.

Federal return was filed MFJ in state A

Where does the Tp pay state taxes on military pay.

Any help appreciated.

[Dusty2004]

Depends

Using PA as an example - individual resides in PA and enters the service. Reports for active duty in KY and then to Afghanistan. Any pay earned in KY and Afghanistan is not taxable to PA.

Dusty

[JG EA]

I searched on-line for "home of record". You can get a lot of info that way. Here are a couple of points I copied from here and there.

"Home of Record is the state recorded by the military State of Legal Residency.

Legal residency (SLR) is “home of record,” unless changed it to another state.

From a tax standpoint, SLR is considered your “domicile” or “resident” state as long as you are on active duty.

Each state decides whether service members must file a return when they are stationed outside the state. If “home of record” was in a certain state, he might be required to file a return, then deduct all of his active duty income and pay little or no tax. Some “home-of-record” states, like South Carolina, will tax Joe on his income even if he is stationed outside of his “home of record.”


When California is a “home of record” and the active military is stationed outside of California, the service member is considered a nonresident of California. For guidance about filing in a state other than your “state of legal residence,” see that state’s active duty member is not considered a resident of a state unless it is his SLR."

Also pointed out, Home of Record can't be changed by just having checks sent somewhere else. So, your taxpayer changed his home of record with the military?

Also, any secular work done in a state that is not a home of record - a tax return has to be filed.

If he changed his home of record and his wife didn't, then they could be residents of two different states. (I am not sure of this point - there may be special rules for military spouses but didn't have time to look this up.)

[Bonnie]

Every state is different as far as how they tax military pay. Some do all the time, some only if TP is stationed in their Home state of record. Some never. But the determining factor is where is the taxpayers home of record? California does not tax military pay when member stationed outside Calif. Most times the military member takes care of this at finance and there is no state tax withheld and so no need to file a return. Living near a military post and also the wife of a retired military, I've done lots of returns. I see a lot who are residents of TN, TX, or FL. If they get the chance they will change state of residence to a state that has no state tax. They have to do that through the military finance office. Also new law deals with the spouse being exempt from paying tax to the state they are living in under some circumstances.