NEWLYWEDS - MILITARY SPOUSE - MULTIPLE STATES (MA, KY, TX)

[gfizer]

Looking for a little direction.  New clients.  He is a resident of MA who is in the Army and stationed in Texas.  He has a MA driver's license. She was a KY resident until the time they married in March of 2020 and still has a KY driver's license.  The day after their wedding in KY she moved to Texas where he was stationed.  He has a w2 from the military with MA state withholding.  She has a w2 from a job in KY prior to getting married with KY state withholding and a w2 from a job in TX with no state withholding.  I am thinking that I need a part year Kentucky return, nothing for Texas of course, and a Massachusetts return. Problem is he was considered a full year resident of MA and she has never lived in MA.  Any idea what the proper way to handle this is?  My brain is fried. 

[Hahn1040]

you want to refer to MilitarySpousesResidencyReliefAct(MSRRA)   https://www.militaryonesource.mil/financial-legal/legal/family-legal-issues/military-spouses-residency-relief-act/

The 2009 law allowed military spouses who were residents of the same state as the active duty member to maintain that state residence .  Active duty members have long had this benefit.

the 2018 amendment now allows a military spouse to elect to be a resident of the same state as the active duty member.  He/she does not have to ever have lived in that state.

For your couple, she will be a part-year resident of KY from before she was married.

For the rest of the year, she can choose to be taxed as a MA resident with her husband   OR she can make the choice of TX

He will always be a MA resident unless he takes the steps to change.  because he is stationed in TX, he has the opportunity to change to TX and never pay state tax again.  MANY military take advantage of this opportunity.  I can't tell you how many military members are TX or FL residents!  There are many other state that either don't have a state tax or don't tax active duty- but TX and FL are the most often seen.

[Catherine]

@gfizer if you need any help with the MA return, send me a note.  MA excludes MA bank interest from taxation, and also has a rent deduction, and still has penalties for no health insurance.  Plus other pitfalls and oddities.

[gfizer]

6 minutes ago, Catherine said:

@gfizer if you need any help with the MA return, send me a note.  MA excludes MA bank interest from taxation, and also has a rent deduction, and still has penalties for no health insurance.  Plus other pitfalls and oddities.

Thanks for the offer, Catherine.  They only have wage income and no rent.  They are going to file separately so only his income will be included on the MA return.   I think I show their combined Federal income and AGI on page 1 though, correct? 

[Catherine]

57 minutes ago, gfizer said:

Thanks for the offer, Catherine.  They only have wage income and no rent.  They are going to file separately so only his income will be included on the MA return.   I think I show their combined Federal income and AGI on page 1 though, correct? 

Yup, but then MA income will only show his.  Nor will the Schedule HC apply to her as a non-resident.

[gfizer]

15 minutes ago, Catherine said:

Yup, but then MA income will only show his.  Nor will the Schedule HC apply to her as a non-resident.

Thank you!