Category: North Carolina
North Carolina Military Filing Information
If you are serving in the United States Armed Forces and your domicile (legal residence) is North Carolina, you must pay North Carolina income tax and North Carolina income tax should be withheld from your military pay, regardless of where you are stationed.
Domicile or legal residence is an individual's permanent home. Your legal residence does not change even though you may be absent for one or more years unless you intend to change your state of residence and you take voluntary and positive actions to do so. Actions that demonstrate your intent to establish a new state of residence include:
- physical presence in a new location,
- registration of automobiles,
- location of bank accounts,
- filing and paying local property and income tax in the new location.
Without such actions, residency is not changed. A statement that a servicemember intends to carry out these actions at a later date is not sufficient.
Under the Servicemembers Civil Relief Act, if you are a legal resident of another state who is stationed in North Carolina on military orders, you will not be taxed on your military pay by North Carolina. However, if you receive income from non-military employment, tangible property or a business located in North Carolina, you must pay the North Carolina tax on that income.
Military Spouse Income: The Military Spouses Residency Relief Act of 2009 amended the Servicemembers Civil Relief Act to provide that a servicemember’s spouse shall neither lose nor acquire a residence or domicile in a state when the spouse is present in the state solely to be with the servicemember in compliance with the servicemember’s military orders if the residence or domicile is the same for both the servicemember and the spouse. Therefore, effective for tax years beginning in 2009, the income earned for services performed in North Carolina by a spouse of a servicemember who is domiciled in a state other than North Carolina is not subject to North Carolina income tax if :
(1) the servicemember is present in North Carolina solely in compliance with military orders;
(2) the spouse is in North Carolina solely to be with the servicemember; and
(3) the spouse is domiciled in the same state as the servicemember. All three conditions must be met to qualify for exemption.
If you are the spouse of a servicemember who is legal resident of North Carolina, the Revenue Department does not assume that you are a North Carolina resident because of marriage. Your residency is based on your individual circumstances. If you filed a joint federal return and one of you was a nonresident of North Carolina who had no North Carolina taxable income, you may file a joint State return. Once you file a joint return, you cannot choose to file separate returns for that year after the due date of the return. However, you still have the option of filing your State return as married filing separately. If you choose to file a separate North Carolina return, you must complete either a federal return as married filing separately reporting only your income, deductions, and exemptions, or a schedule showing the computation of your separate income, deductions, and exemptions and attach it to your North Carolina return. You must also include a copy of your joint federal return unless your federal return reflects a North Carolina address.
New! A new section, Veteran Information, has been added to Page 1 of Form D-400. You
and your spouse, if filing a joint return, can voluntarily indicate whether you and your spouse are veterans or not by filling in the appropriate circle on Form D-400. If married filing separately, do not complete the information for your spouse. The information reported on your return will be used to compile a report about the number of veterans filing tax returns in North Carolina. No information regarding your tax liability will be shared. Information specific to individual employers or employees shall remain confidential in accordance with G.S. 105-259.