Thursday, January 26, 2012

Can my spouse claim residency in my home state by virtue of being a military dependent?

I'm in the military. My wife and I are from different states. When we got a new assignment, I kept my home state residency and pay my taxes there (cheaper), while she has to pay taxes in the new location. Would like to make her a resident of my state to save some money on taxes, but can't tell if it's legal or feasible.Can my spouse claim residency in my home state by virtue of being a military dependent?Being in the Military you and your wife would be allowed to "domicile" in any state in which you can or have established residency according to the laws of that state. By making your "domicile" in a state like South Dakota or Texas you avoid state income tax on your military income. Your wife can file as a resident of that "domicile" state also however she must pay state income tax in the other state(s) if she earns money there. Some types of work that she could do such as selling Avon may be able to be reported only in her "domicile" state. I would think that a tax professional near any large military base would be very knowledgeable in this regard. You can establish your "domicile" in South Dakota without ever going there the only problem is that all of your mail goes there first and they will send it to you.Can my spouse claim residency in my home state by virtue of being a military dependent?As she is not in the military, she may be "resident" of a different state than you. If she starts working in the state where you are stationed she will probably become a resident of that state whether she wants too or not. Each state has different rules.Can my spouse claim residency in my home state by virtue of being a military dependent?It is true that rules vary from State to State. If you have a good Tax Program with States, It will take into account the fact that You are in the Military, and that Your Spouse is residing in a different State. It won't make much if any difference on your Federal Taxes. You can choose either MFJ or MFS. Remember MFS disallows you both automatically from many deductions and credits; EIC being one of them. The State thing can be tricky and will be more expensive on preparations, because of extra States. Check with a Tax Professional with Credentials, because the wrong move on your tax return could lose you a lot of tax cut. Good Luck. Blessings to You.Can my spouse claim residency in my home state by virtue of being a military dependent?
she can file as a resident or part year resident. She also has the option to file as married filing separate in the state alone. Seek a qualified tax professional, better a CPA than the national tax services as multi-state tax issues are usually above their level of service. With multi-state tax filings you sometimes need to test the different ways to file to see what is best.

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