Can the MSRRA Help You Lower Your Tax Bill?

by johnnyc2id on Feb 20, 2019

Taxes, Enrolled Agent, military

In 2009, Congress passed the Military Spouse Residency Relief Act (MSRRA), which amended the Servicemember Civil Relief Act to provide spouses of service members with the same options in regards to keeping a home of record.  A spouse of a service member could now keep their prior state of residence when making a move with the service member to a new state.  This can be very advantageous for a spouse who is earning income and moving from a low (or no!) income tax state to a state with a high rate of state income taxes.

                Who Qualifies?

For a spouse to qualify under the MSRRA, they must meet the following conditions:

  • Be legally married to a service member who is relocating on active duty military orders to a new military duty station in one of the fifty states, the District of Columbia, or a United States possession.
  • Before relocating, the spouse must have the same state of residence as the service member.

What are the Benefits?

Not having to change your state of residence can have several benefits, including:

  • Paying state income taxes at the level of the original state.
  • Not having to file multiple partial year state tax returns.
  • Keeping your voting eligibility in the original state.
  • Can be exempt from having to pay personal property taxes (as on a car). **Will usually require the spouse to submit an exemption with the new state.

What It Does Not Do

While an option that can be very beneficial to a military spouse, there are some limitations to the MSRRA, such as:

  • It does not allow the spouse to pick and choose which state they reside in.  The service member and the spouse must have legal residence in a state prior to the relocation in order to continue to claim the original state as their residence.
  • State regulations can be very specific on what they require for residence, just because you live there does not necessarily mean you have residence.  Understand the regulations of your state to make sure you can legally claim it as your place of residence.


Have Questions?

The Military Spouse Residency Relief Act can be advantageous for a military family that moved during the year, but it can also be complicated to determine if you qualify AND if it would benefit you.  The good news is you do not have to guess on this stuff, you can talk to an expert!  If you moved during the year and want to know if the MSRRA will help lower your tax liability make an appointment with your local base’s tax office; which will usually be at the base’s legal center.  Don’t pay more than you have to, talk to an expert today!



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