Category: New Jersey
New Jersey Military Filing Information
A member of the Armed Forces whose home of record (domicile) is New Jersey when entering the service remains a resident of New Jersey for income tax purposes, and must file a resident return even if assigned to duty in another state or country, unless he or she qualifies for nonresident status (see below). If you are a New Jersey resident, you are subject to tax on all your income, including your military pay, regardless of where it is earned, unless the income is specifically exempt from tax under New Jersey law. Mustering-out payments, subsistence and housing allowances are exempt.
Note: Military pensions are exempt from New Jersey gross income tax, regardless of your age or disability status.
A member of the Armed Forces whose home of record is New Jersey and who is stationed outside the State (whether living aboard ship, in barracks, billets, apartment, or house) and does not intend to remain outside New Jersey, continues to be a resident and must file a resident return and report all taxable income. However, if a serviceperson pays for and maintains facilities such as an apartment or a home outside of New Jersey, either by out-of pocket payments or forfeiture of quarters allowance, such facilities will constitute a permanent home outside of New Jersey. In this case, the serviceperson is not considered a New Jersey resident for tax purposes.
A member of the Armed Forces whose home of record (domicile) is outside of New Jersey does not become a New Jersey resident when assigned to duty in this State. A nonresident serviceperson’s military pay is not subject to New Jersey income tax and he or she is not required to file a New Jersey return unless he or she has received income from New Jersey sources other than military pay. Mustering-out payments, subsistence and housing allowances are also exempt. A nonresident serviceperson who has income from New Jersey sources such as a civilian job in off-duty hours, income or gain from property located in New Jersey, or income from a business, trade, or profession carried on in this State must file a New Jersey nonresident return, Form NJ‑1040NR.
If your permanent home (domicile) was New Jersey when you entered the military, but you have changed your state of domicile or you satisfy the conditions for nonresident status, then your military pay is not subject to New Jersey income tax. File Form DD‑2058-1 or DD‑2058‑2 with your finance officer to stop future withholding of New Jersey income tax. If New Jersey income tax was erroneously withheld from your military pay, you must file a nonresident return (Form NJ-1040NR) to obtain a refund of the tax withheld.
Spouses/Civil Union Partners of Military Personnel
Beginning with tax year 2009, Federal law, known as the Military Spouses Residency Relief Act, allows a military servicemember’s nonmilitary spouse/civil union partner to keep a tax domicile while moving from state to state, as long as he or she moves into a state to be with a spouse/civil union partner who is in the state on military orders. Nonmilitary spouses/civil union partners (of military personnel) who were not domiciled in New Jersey when they married the military spouse or entered into the civil union are not considered residents of New Jersey if:
- The principal reason for moving to this State was the transfer of the military spouse/civil union partner; and
- The nonmilitary spouse/civil union partner maintains a domicile in another state; and
- The nonmilitary spouse/civil union partner intends to leave New Jersey when the military spouse/civil union partner is transferred or leaves the service.
Military Spouses Residency Relief Act
Under this act, a nonmilitary spouse/civil union partner who meets the above requirements is not subject to New Jersey gross income tax on income (wages) earned from services performed in this State. If you are a nonmilitary spouse/civil union partner whose wages are exempt from New Jersey gross income tax, file Form NJ-165, Employee’s Certificate of Nonresidence in New Jersey, with your employer to stop future withholding of New Jersey income tax. You must notify your employer if conditions for the withholding exemption no longer apply. If New Jersey income tax was withheld or estimated payments were made in error, you must file a nonresident return (Form NJ-1040NR) to obtain a refund.
The Military Spouses Residency Relief Act applies only to income (wages) from services performed by a nonresident civilian spouse/civil union partner of a servicemember. Nonresident civilian spouses/civil union partners are subject to New Jersey gross income tax on all other types of income earned from New Jersey sources (e.g., income from a business carried on in this State, gain from sale of property located in New Jersey) and must file a New Jersey nonresident return if required. See “Who Must File” on page 5. Wages earned in New Jersey by a nonresident civilian spouse/civil union partner who lives outside the State are also subject to New Jersey gross income tax. A nonresident civilian spouse/civil union partner who lives outside New Jersey may not use Form NJ-165 to claim an exemption from New Jersey gross income tax withholding on wages earned in this State as the nonmilitary spouse/civil union partner of a servicemember.
New Jersey law requires that a married couple’s filing status for New Jersey gross income tax purposes be the same as for Federal income tax purposes unless they are a civil union couple. A married couple filing a joint Federal return must file a joint return in New Jersey. However, when one spouse/civil union partner is a New Jersey resident and the other is a nonresident for the entire year, the resident may file a separate return unless both agree to file jointly as residents. If a joint resident return is filed, their joint income will be taxed as if both were residents.
Special rules apply to members of the Armed Forces of the United States and civilians providing support to the Armed Forces.
A person on active duty with the Armed Forces of the United States, who may not be able to file timely because of distance, injury, or hospitalization as a result of this service, will automatically receive a six month extension by enclosing an explanation with the return when filed.
Combat Zone New Jersey allows extensions of time to file income tax returns and pay any tax due for members of the Armed Forces and civilians providing support to the Armed Forces serving in an area which has been declared a “combat zone” by executive order of the President of the United States or a “qualified hazardous duty area” by Federal statute. Once you leave the combat zone or qualified hazardous duty area, you have 180 days to file your tax return. Enclose a statement with your return to explain the reason for the extension.
Death Related to Duty
When a member of the Armed Forces serving in a combat zone or qualified hazardous duty area dies as a result of wounds, disease, or injury received there, no income tax is due for the taxable year the death occurred, nor for any earlier years served in the zone or area.
Military Pensions If you are receiving a United States military pension or survivor’s benefit payments, the military pension or survivor’s benefit is exempt from New Jersey income tax regardless of your age or disability status. Do not include such payments on Form NJ-1040.
Military pensions are those resulting from service in the Army, Navy, Air Force, Marine Corps, or Coast Guard. This exemption does not apply to civil service pensions or annuities, even if the pension or annuity is based on credit for military service. Most military pensions and survivor’s benefit payments are received from the U.S. Defense Finance and Accounting Service while a civil service annuity is received through the U.S. Office of Personnel Management.