Here's how some military spouses could get potentially thousands of dollars in tax refunds

https://www.militarytimes.com/pay-benefits/2019/01/23/heres-how-some-military-spouses-could-get-potentially-thousands-of-dollars-in-tax-refunds/

Here’s how some military spouses could get potentially thousands of dollars in tax refunds

By: Karen Jowers    10 hours ago

Some military spouses could receive potentially thousands of dollars in state tax refunds for tax year 2018, thanks to a new law that took effect Dec. 31 — and lessen or eliminate their tax bill in the future.

The Veterans Benefits and Transition Act of 2018 allows military spouses to choose the legal residence of their service member for state and local tax purposes, as well as for registering to vote — regardless of whether the spouse has ever lived in that state.

The law applies for taxes retroactively to tax year 2018, according to Army Lt. Col. David Dulaney, executive director of the Armed Forces Tax Council. So spouses who choose to claim their service member’s state now could potentially get refunds from the state where they paid taxes. If their newly claimed state has no income tax, or if it’s a lower tax rate, then the spouse comes out ahead.

Under the long-standing Servicemembers Civil Relief Act (SCRA), troops can maintain their legal residence as they are required to move around with the military, which allows them to vote and pay taxes in their state of legal residence, without having to pay taxes in two states.

A significant number of troops claim their legal residence in states that have no state income taxes – such as Florida and Texas. Under the new law, military spouses can claim these states based solely on their service member’s state of legal residence. So the spouse will pay no state income taxes, either.

According to the Federation of Tax Administrators, states with no income tax are:

• Alaska
• Florida
• Nevada
• South Dakota
• Texas
• Washington
• Wyoming

Or, in some cases, the service member’s domicile state has a lower tax rate. So the spouse could pay less in taxes. It’s a choice that spouses will make, but they didn’t have the choice before.
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But there are cautions for military couples, Dulaney said, and he strongly advises them to come in to their legal assistance offices for help in making the decision, and preparing their returns.
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