Residency issues and questions for AD Military related to taxes

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greeneagle5

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Dec 5, 2007
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Tax season is here once again....and residency questions have been raised by my NAVY son. Over the last 2.5 years my JO has lived and worked in FL, RI, and currently Norfolk, VA area with 1 recent overseas 8 month deployment slipped in for some excitement. His home of record is MO. Is there any on-base assistance offices he can visit to get questions answered such as when it comes to deciding where to call "home" for tax reasons ?o_O
Thanks, G5
 
Unless he has done something to change it his home he should claim is the state he lived in upon entering the service. Many will change this to a state that doesn't have a state income tax when able.

All bases have tax assistance centers available as needed, but if your son is a JO I would hope he'd be able to figure this out.
 
Your son's LES will have what state his residency is listed. Unless he annotated something different, it will be his home of record. Regardless of where he has been for TAD or deployment this won't change anything, unless he went to a hostile or dangerous area that is tax free. Even then this basically makes his pay for that month tax free and doesn't really impact how he would do his taxes. He can change his state of residency in certain situations, which admin can help with. Most folks will change it to FL if they end up being stationed there. Unless he has something really out of the ordinary, he should be able to do his taxes with Turbo Tax or another tool without an issue. Bases do have a tax center and he can check there if he has any questions.
 
NavyHoops said:
Unless he has something really out of the ordinary, he should be able to do his taxes with Turbo Tax or another tool without an issue.
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Turbotax (not to plug a commercial product, but whatever it's good) is seriously all almost any military member will ever need. My home for tax purposes is one state, I own a rental home in another state, I live in a 3rd state and within that state I have a domestic employee for which I pay payroll tax. I have investments ranging from Education plans to DRIP stocks to traditional and Roth IRA's (both Roth TSP and traditional Roth) and all I've ever needed to do is bump up which version of TurboTax I use.
 
The Home of Record is the state from which the service is entered. Declared state of residence for tax residency can be same or something different, as long as the military member has met the criteria for establishing residency in a new state. Changing the state of residency is done through military disbursing or personnel.

Base legal office usually has some info, and more senior officers usually pass on how it all works.

Tours of duty in other states than tax state are simply in transient non-resident military personnel mode, and do not make the military member a tax resident. The military member can get a driver's license and register cars in the duty state without becoming a tax resident.

My HOR was GA and remained my state of tax residency until I had a tour in FL. I then registered to vote in FL, got a driver's license and when I bought a new car, got Florida plates. I changed my state of tax residence to FL. My HOR remained GA. I transferred to other states on PCS orders, always voting absentee in FL. My driver's license and auto registration eventually became other states over the years, which is fine. It's not unknown for active duty to have a current license from one state, car registration from another, while stationed in yet another state.

My HOR remained GA throughout my career. Once I left active duty, I then became a resident for tax purposes where I actually lived, and registered to vote in my new home state.





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Appreciate the many good insights on where to find answers...will pass the info on to my JO....He did get a FL drivers license and voter registration while stationed for training there but no longer has a FL mailing address. I've been registering his vehicle in MO (this last time while he was deployed overseas).
 
I know that Parris Island has/had a Tax Information and Help Center at the Law Center. They have volunteers trained by H & R Block to help JO and enlisted with any military tax questions. Check with his depot law center.
 
Capt MJ said:
The Home of Record is the state from which the service is entered. Declared state of residence for tax residency can be same or something different, as long as the military member has met the criteria for establishing residency in a new state. Changing the state of residency is done through military disbursing or personnel.

Base legal office usually has some info, and more senior officers usually pass on how it all works.

Tours of duty in other states than tax state are simply in transient non-resident military personnel mode, and do not make the military member a tax resident. The military member can get a driver's license and register cars in the duty state without becoming a tax resident.

My HOR was GA and remained my state of tax residency until I had a tour in FL. I then registered to vote in FL, got a driver's license and when I bought a new car, got Florida plates. I changed my state of tax residence to FL. My HOR remained GA. I transferred to other states on PCS orders, always voting absentee in FL. My driver's license and auto registration eventually became other states over the years, which is fine. It's not unknown for active duty to have a current license from one state, car registration from another, while stationed in yet another state.

My HOR remained GA throughout my career. Once I left active duty, I then became a resident for tax purposes where I actually lived, and registered to vote in my new home state.





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Helpful explanation
 
Transferring residence to a tax-free state (if able) is usually the best option. But not always. My HOR was VA and I maintained that throughout my military career. When I decided to attend grad school in VA, I could apply and pay tuition as a resident, even though I wasn’t actually living there. That probably helped me in admissions and definitely saved a LOT of money in tuition - far more than I paid in taxes over the years given my income. You think you can just “switch back” as you get ready to leave the military, but most states are VERY cautious about “new residents” when it comes to things like in-state tuition, especially if you’re not currently living there.
 
usna1985 said:
Transferring residence to a tax-free state (if able) is usually the best option. But not always. My HOR was VA and I maintained that throughout my military career. When I decided to attend grad school in VA, I could apply and pay tuition as a resident, even though I wasn’t actually living there. That probably helped me in admissions and definitely saved a LOT of money in tuition - far more than I paid in taxes over the years given my income. You think you can just “switch back” as you get ready to leave the military, but most states are VERY cautious about “new residents” when it comes to things like in-state tuition, especially if you’re not currently living there.
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Virginia for one was decidedly NOT open to even multi year folks being considered residents even if they met the usual tests for residency. Back in the 80's, my ex-wife was denied In-State tuition because she was a Navy Spouse even though she had worked and paid state income taxes in VA, had a Drivers License and car registered in VA, owned a home in VA and was a registered voter in VA.
 
O'sMom said:
I know this is an old post, but I just have to jump in here. I grew up in Western New York, and Western New Yorker's do NOT consider themselves Upstate New Yorker's. ;)
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OldRetSWO said:
Virginia for one was decidedly NOT open to even multi year folks being considered residents even if they met the usual tests for residency. Back in the 80's, my ex-wife was denied In-State tuition because she was a Navy Spouse even though she had worked and paid state income taxes in VA, had a Drivers License and car registered in VA, owned a home in VA and was a registered voter in VA.
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Much of this changed under the Military Spouses Residency Relief Act.
 
Capt MJ said:
The Home of Record is the state from which the service is entered. Declared state of residence for tax residency can be same or something different, as long as the military member has met the criteria for establishing residency in a new state. Changing the state of residency is done through military disbursing or personnel.

Base legal office usually has some info, and more senior officers usually pass on how it all works.

Tours of duty in other states than tax state are simply in transient non-resident military personnel mode, and do not make the military member a tax resident. The military member can get a driver's license and register cars in the duty state without becoming a tax resident.

My HOR was GA and remained my state of tax residency until I had a tour in FL. I then registered to vote in FL, got a driver's license and when I bought a new car, got Florida plates. I changed my state of tax residence to FL. My HOR remained GA. I transferred to other states on PCS orders, always voting absentee in FL. My driver's license and auto registration eventually became other states over the years, which is fine. It's not unknown for active duty to have a current license from one state, car registration from another, while stationed in yet another state.

My HOR remained GA throughout my career. Once I left active duty, I then became a resident for tax purposes where I actually lived, and registered to vote in my new home state.





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This.
As pointed out as a service member moves to different duty stations they are permitted to change residency to a place where they are based, normally through something such as a driver’s license. This applies to the spouse as well. So, although I live in NY and work in NJ I pay TX state income tax.
It can be goofy and raise eyebrows. At one point I had a Texas driver’s license with a KY address that was actually in TN (Ft Campbell is goofy this way), but we lived in NY and my TN registered car listed our NY address. I was once pulled over and this resulted in some head scratching.
“Your car is registered in TN but your registration address is in NY.”
“Yes sir. My wife was based at Ft Campbell.”
“But that’s in Kentucky.”
“Yes sir.”
“Then why is your car registered in TN when the address on your TX license is KY?”
“Because our house was in TN.”
“Then why isn’t your address in TN???”
“Because the post office was in KY.”
“Then why isn’t your… oh… never mind…”
The trooper threw up his arms and let me go with a warning,
But… as @usna1985 pointed out there might be other considerations. Also, some states exempt military residents based out of state from state and local income tax.
Also be advised that some insurance companies don’t understand this. I left USAA for a little while but eventually returned for this reason.
 
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BTW, my situation was somewhat unique. Most people are best off by changing their residence to a state that doesn't have a state income tax. My caveat was that, before you do so, you investigate what benefits, other than taxes, different states have and how those factor into what you want to do when you leave the military. I must confess that I didn't change my state of residency b/c I was never stationed in a state with a better situation than VA. Then, when I wanted to attend grad school, I realized that I had a very sweet deal by being a VA resident.

FYI, I did have to "argue" with a couple of schools since I wasn't actually living in VA. However, my DL was VA, I voted in VA and, most importantly, I'd paid taxes to VA the entire time. It's hard to say you're not a resident when you're paying taxes . . . just saying.
 
Excellent advice to do the research and comparative analysis.

DH was a PA resident. PA has state income tax, but PA residents on AD outside the state did not pay. As a naval aviator, he would have been highly unlikely to serve in PA, unless he did a tour at Penn NROTC. No state income tax for him his entire career.

Some states have state income tax, but do not tax military retirement pay and often federal retirement pay. DBIL (Navy AD and retired Captain) and DSIL (federal GS-13) were VA residents long enough to get their daughters through VA colleges on in-state tuition. Then then moved just over the state line into PA near Gettysburg. PA does not tax military or federal civil service retirement.



Here’s the state-by-state:
www.military.com

State Tax Information for Military Members and Retirees

What tax benefits does your state offer to military members and retirees? Find out which benefits are available to you.
www.military.com www.military.com
 
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Capt MJ said:
This is a zombie thread that’s always pertinent!
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It’s a subject incoming SA Cadets and Midshipmen (and parents) should understand. They may… or may not want to claim the SA state as their residency. Maybe keep their home state. Maybe change once they graduate and go to schooling and duty assignments.
It’s not the first thing on their minds as they prepare for I/R Day, but decisions made now can have long term impacts.
 
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