For military families, filing state taxes becomes complex as you move between duty stations. The following Q&A is designed to help you navigate some of the most frequently asked questions regarding state taxes.
I’m a military spouse earning income. How do I file my state income taxes?
State taxes are challenging because the tax laws in each state are different. In most cases, you should file taxes in the state where you are earning income. Some states require that you file a tax return just for being a resident, but others don’t. For example, if you live and earn money in Kansas, you will need to file a Kansas income tax return. But if you live in Kansas and you earn income in Missouri, you will file a Missouri return as a non-resident instead. Kansas doesn’t require military or their family members to file if they haven’t earned Kansas-source income.
How do I know if I need to file a state income tax return?
One reliable way to get updated information is to consult your state’s Department of Revenue website. You should be able to find information about whether you need to file, plus tax forms, rates, and any credits or deductions that are specific to that state. Many states even have specific Q&A sections for military service members filing income taxes.
What is State of Legal Residency?
Also known as your “home of record,” this is the state where your spouse will report and pay income taxes. It is frequently the place your spouse was living when they joined the service. Because you tend to move from duty station to duty station, you will need to determine your spouse’s State of Legal Residency (SLR) for filing purposes.
Should I file state taxes in the same state as my spouse?
The Military Spouse Residency Relief Act gives you the ability to choose whether to claim the state you are living in or your spouse’s legal residence for tax purposes. You must simply be able to prove that you have lived there, too. Proof of residence could include voter registration, driver’s license, property tax receipt, or vehicle registration. If you have never lived in their resident state, you will need to file a separate return in the state where you have earned income.
Say you live in Missouri, but you can claim Georgia as your home of record. In this case, you would file and pay taxes on your income to the state of Georgia. According to Missouri’s tax laws, you would also need to file a MO tax return, but your income would not be taxed by Missouri. You would specify that you are a military non-resident on your Missouri state return.
We lived in two different states this year. I earned income in both. Where should I file state taxes?
You will most likely need to file a state tax return for both states where you earned income. Remember: if you had money withheld from your paychecks and you are owed a refund from the state, you will need to file a return to receive your money.
My spouse works a non-military job in our current state. Do we have to file state taxes?
Your spouse already reports military pay to their state of legal residence. But if they earn income from a civilian or non-military job, they will need to report those wages as a non-resident in the state where you are currently living.
Note: they may get a tax credit from their state of residence for what they paid in taxes as a non-resident.
I work as an independent consultant. I get a 1099 from my employer. Do I pay state taxes where I live or where the company is based?
If you work as an independent consultant, you should only pay taxes in your resident state – not where the parent company is located. Read also 5 Tax Tips for Independent Sales Consultants.
You might also be interested in: 4 Tips for Filing Taxes on Your Own in the Military