What is the Military Spouses Residency Relief Act (2009) (US)?

Introduction

On 11 November 2009 Congress passed an amendment to the Servicemembers Civil Relief Act (SCRA), known as the Military Spouses Residency Relief Act (MSRRA) (Public Law 111-97).

The amendment involved the rights of spouses who are accompanying a servicemember to a new state due to active duty military orders, and is broken down into two major subsections: voting rights and tax rights.

Refer to The Servicemembers Civil Relief Act (2003), Military Lending Act (2006), and Veterans Benefits and Transition Act (2018).

Background

Moving from place to place requires a lot of effort and changes, but two amendments to the SCRA – via two laws – make it easier for military spouses regarding their residency, voting and state taxes.

  • First Amendment: In 2009, the Military Spouse Residency Relief Act allowed military spouses to maintain legal residence in the state where they lived before a permanent change of station (PCS) move with their Active Duty servicemember.
  • Second Amendment: In 2018, the Veterans Benefits and Transition Act provided additional protections and benefits to military spouses.

How Do I Maintain My Legal Residence Under MSRRA?

Every person has a state of legal residence and, for most civilians, that state of legal residence is the place where they live. However, servicemembers and their families move frequently, and the SCRA allows Active Duty military members to maintain their legal residence in the place they consider home.

The MSRRA allows military spouses to declare the same state of legal residency as their spouse. The Veterans Benefits and Transition Act allows spouses to make that choice regardless of when they were married. The following conditions must be met to qualify under the MSRRA:

  • The service member is living on military orders in a state that is not his/her resident state.
  • The spouse is in that state solely to live with the service member.
  • Both the service member and spouse have the same resident state.
  • The spouse only pays taxes on income in their state of legal residency when they meet the above conditions.

You need to retain sufficient contacts with your state to show that you intend to retain it as your domicile and/or residence. Below is a list of some things you may want to consider in establishing your choice.

  • Where do I pay taxes?
  • Where do I own property?
  • Where am I registered to vote?
  • Where is my vehicle registered?
  • From what state was my driver’s license issued?
  • Where is my bank located?
  • What state does my military spouse declare on his LES?
  • Where were we married?
  • Where was I born?
  • Have I declared myself a resident/domiciliary of a particular state on a legal form (divorce decree, child custody decree, etc.).

If the majority of the answers are one particular state and it is not the state that you and your spouse are stationed in, then you may have chosen to retain your state as the controlling state. If the majority of the answers indicate the state in which you have PCSd, you may have relinquished your right to retain your domicile or residence; thus losing the protection of the act.

A military spouse may want to ‘adopt’ the residence/domicile of their military spouse once they become married; however, this is not always possible (the spouse would need to have a connection, with the above points providing a starting point).

If you are absent from your state of residency and/or domicile ONLY because you have decided to accompany your spouse while he/she is on military orders, then:

  • You will not automatically lose your residence/domicile in your state.
  • You will not automatically gain the residence/domicile of the state to which you PCS.
  • You do not have to intend to return to your state.

What About Using My Spouse’s State of Legal Residence?

Spouses may vote and pay taxes in their Active Duty spouse’s state of legal residence, according to the Veterans Benefits and Transition Act of 2018.

What Income is Covered by MSRRA?

A military spouse’s income is subject to tax laws in the state of legal residence. SCRA only covers an Active Duty servicemember’s military income so any other income is taxable by the state in which it is earned.

Military spouses and servicemembers may be required to file and pay state income taxes on other income in the state where it is earned. This includes income from rental property.

Servicemembers and spouses who own businesses should check with their legal and tax professionals. They can help determine if and how MSRRA and SCRA apply to their specific situations.

What about Voting?

This act affects a military spouse’s voting rights in federal, state, and local elections.

  • If you CHOOSE to retain the residence and/or domicile of your state then you can vote in your state’s local and state elections.
    • You should vote for all Federal elections through your state.
  • If you CHOOSE to retain the residence and/or domicile of your state you will not be able to vote in the state that you have PCSd to.

What about Taxes?

Some states do not have state income taxes; therefore, this may not be an issue for this assignment.

However, if your military spouse is PCSing to a state that does have state tax, you intend to work in that state and you CHOOSE to retain your residency/domiciliary in your state then the income earned within that new state will not be subject to that state’s income tax.

Your income will be subject to your own state’s income tax laws. Remember you must CHOOSE to retain your state of residency and/or domiciliary for this protection to take effect.

With regards to State tax liabilities, check the relevant State’s website for current details (for example, Virginia, Wisconsin, and Iowa).

What about Self-Employment Income?

Income you earn from self-employment will generally be exempt from State income tax if the primary source of income from your business is derived from your performance of a service.

However, if your business employs others and/or utilises significant capital (equipment, vehicles, etc.), then the income you derive from the business will likely not be exempt from State income tax.

What about Tax Liabilities Other Than Income Tax?

The federal law contains relief provisions for personal property tax, as well as for income tax. In general, motor vehicles and other tangible personal property owned by the spouse of a servicemember will be protected from State taxation to the same extent as if owned by the servicemember.

Both the spouse and the servicemember must claim another state as their state of legal residency, and the property must be titled or leased in the name of the spouse, the servicemember, or both.

What is NOT COVERED by MSRRA?

MSRRA does not permit military spouses to maintain a legal residence in a state different than their Active Duty servicemembers. State laws, however, may be more generous than the federal MSRRA.

Military spouses must fulfil their state’s residency requirements. That almost always includes having a physical presence in that state.

Sometimes a military spouse will live in a different state than the Active Duty servicemember. In these cases, the MSRRA generally does not apply.

I moved to [State] to be with my Servicemember Spouse, but we are now Legally Separated. Do I still Qualify for Relief under the MSRRA?

Your income will cease to be exempt from a State’s income tax no later than the entry of a divorce decree. However, your exemption may end if you voluntarily maintain a separate residence from your spouse since the MSRRA specifically applies to spouses who are in the state solely to be with the servicemember.

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