Military spouses get laxer residency for taxes this year

Tax season is just around the corner and this year service members and their families have some new opportunities for savings, as well as a couple areas where they may have to pay extra.

One of the biggest, and possibly most lucrative, changes to law this tax season allows military spouses to file taxes in their service members’ state, even if they aren’t in the same state.

“In 2018, a military spouse may have had to file a different tax return than the service member did, because they have what we call split legal residency,” Army Lt. Col. David Dulaney, executive director of the Armed Forces Tax Council said in a Friday call with reporters. “Now, that’s no longer a concern. Our military spouses can now elect to use the legal residence of the service member for filing their state and local taxes.”

Service members can already legally keep their residency in one state, even if they don’t live there, since troops move so often. However, spouses were forced to change their legal residency when they moved for tax or voting purposes.

Dulaney said the benefit is helpful because spouses who are not in the same state or spouses who moved with their service members will no longer have to figure out how to split their income for taxes in accordance to state laws.

It also gives families the opportunity to file their taxes in the state with lower state income taxes.

“It will reduce the overall tax burden on military families,” Dulaney said. “For instance, I’m a legal resident in Texas. I have been, I was born in Texas and that’s where I will return after I retire. Because of that, if my spouse was a resident in Virginia, we could now elect to use my legal residence for state and local tax purposes and we would not be required to file taxes in Virginia, even though she works in Virginia and has a vehicle there.”

That has the potential to save military families hundreds or thousands of dollars.

While the benefit could be helpful, Jennifer Davis, National Military Family Association deputy director for government relations, said service members should talk with a tax professional before making the change.

“If somebody is going to make a change like that when they are filing their taxes, it’s a good idea to talk to Military OneSource, which has tax services,” Davis said. “I would encourage reaching out and not making split decisions.”

Not all changes to tax law this year are working in favor of service members.

Reservists might end up paying a little more as a provision from the Tax Cuts and Jobs Act takes effect.

In the past, reservists were able to deduct their travel expenses to get to drill duty.

“They were able to take it as an above the line deduction if it was for more than 100 miles away,” Dulaney said. “If it was for less than 100 miles, the reserve component could take the itemized deduction of the unreimbursed drill expenses and include that as a trade of employee business deduction.”

The Tax Cuts and Jobs Act suspended miscellaneous itemized deductions, so travel under 100 miles to and from training can no longer be written off.

If all this is confusing, you’re not alone. The Armed Forces Tax Council offers volunteer income tax assistance (VITA).

“If you’re focused on trying to get your taxes figured out and filed, you’re not focused on mission or taking care of your family,” Dulaney said. “We want to take that burden from you so you can get back to the mission and get back to the time with your family.”

VITA can help with federal or state tax returns and the service is provided for free.

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