By Capt. Andrew J. Rouchka (U.S. Army)
Stuttgart Law Center
Q: I am a civilian, married to a service member. My husband is a legal resident of Texas. We met when we were both living in North Carolina. I’ve been working on post while stationed here in Germany. Do I need to file an income tax return in North Carolina?
A: You need to file a tax return in North Carolina as long as you remain a legal resident there.
The Servicemembers Civil Relief Act (“SCRA”) protects a service member’s military pay from income taxation by a state where the service member resides or is assigned pursuant to military duties, unless that state is also the service member’s state of permanent residence or domicile. The Military Spouses Residency Relief Act of 2009 (“MSRRA”) amended the SCRA to allow some spouses of service members to retain or regain a state of domicile for tax purposes. Under MSSRA, the spouse of a service member “shall neither lose nor acquire a residence or domicile for purposes of taxation . . . by reason of being absent or present in any tax jurisdiction of the United States solely to be with the service member in compliance with the service member’s military orders” if the service member and spouse share the same legal residence.
The MSRRA does not permit a spouse to pick just any state of residence. The spouse must have at one time met requirements of physical presence in the state and be able to show indicia or proof of intent to make or keep the state their permanent home. You can show your intent to make a new permanent home by registering to vote, buying property, registering vehicles, or making other significant connections to the state. Once you’ve established those connections your husband’s state of legal residence, the MSSRA allows you to keep that legal residence despite moving to other jurisdictions to be with your spouse who is on military orders.
State tax authorities are likely to scrutinize claims of changed legal residence because they stand to lose revenue. Changes in residency with no basis in fact may be viewed as fraudulent by the authorities and subject the family to significant additional tax penalties and interest.
In your case, consider how you would respond if you received a letter from the State of North Carolina demanding tax payment. Do you have significant enough connections with Texas to convince North Carolina that you are no longer a resident?
For more information, contact the Stuttgart Tax Center for an appointment for free tax services open to all ID cardholders on Kelley Barracks at 421-4152/civ. 0711-729-4152, http://www.stuttgart.army.mil/services-legal.html.
Do you have a legal question you would like to see answered in a future edition of The Citizen? If so, contact “Ask a JAG”
This column is not intended as individual or specific legal advice. If you have specific issues or concerns, you should consult a judge advocate.
