VA Military Spouse Residency Relief Act

[Taxman VA]

Husband is military active with HI as his state of residency. His wife is a teacher here in VA where they reside.

Her W2 income is exempt from VA tax, right?

If they have other sources of income received in VA, they are reported on F 763 (VA- NR form). As long as under the threshold, than no VA tax would be owed and they can file a joint F763.

Am I correct in my interpretation?

Thanks so much,


Taxman VA

[Burke]

Not exactly so clear cut. Was she also a resident of HI when they got married? If the only reason she is in VA is to accompany her spouse to where he is stationed, then she may qualify for this exemption. If she was a resident of VA to begin with, and married him after he transferred here, then no exemption. See VA Dept of Taxation Tax Bulletin 10-1 for a discussion of this matter. "In order to claim a domicile in another state, the spouse must have (i) resided in the other state with the intent to make a permanent home there, and (ii) not abandoned that domicile when moving to reside with the service member OR for any other reason." Note that this is a federal law, and applies to all states. Wages would be exempt, but not rental income from VA property, and self-employment is an issue. If she qualifies for exemption in VA, then she would file in her former resident state. VA also interprets this law to mean that BOTH spouses have to be from the SAME state (in your case, HI).

[Taxman VA]

VA Military Spouse Residency Relief Act

Burke:

Thanks for your complete explanation of this particular tax situation.

It makes sense what you are saying.

Best Regards,


Taxman VA