Hello All,
While doing our taxes for 2020 and comparing a joint return vs a married but filing separate return it dawned on me that I was clueless as to how a joint return would be done at a state level given our circumstances. I think I’ve settled on doing a separate return due to student loan issues but I am curious as to if my wife has been filing her state taxes correctly and if I should/could file mine similarly. Here are the details:
- My spouse is a service member, I am not, but we should be covered by the MSRAA (Military Spouses Residency Relief Act 2019) and SCRA (Servicemembers’ Civil Relief Act).
- My spouse and I met in Connecticut and she became a service member while we were both residents of CT. We intend to return to CT at some point in the future, likely when she leaves the service.
- We have moved to two different states (AZ and MD) due to permanent change of station orders and are currently living in a rental home in MD.
- She has maintained her "Home of Record" and "Domicile" as CT throughout and has had income tax withheld in CT only since leaving CT.
- She currently has an Arizona license and car registration; I currently have a Maryland license and car registration.
- We filed for 2019 as married but filing separately for both federal and state. I filed my state taxes in Maryland as a resident, she filed taxes with CT as non-resident.
- Per guidance here Income Tax Information-Military (ct.gov) , she has filed her taxes essentially as “resident able to file as nonresident” to receive a full state tax refund each year from CT and she has not paid any other states any income tax. More info on the regulations here: Is my military income taxable to Connecticut? – Support (taxslayer.com)
So, has she been doing this correctly and does she really have no tax liability in CT or any other states while living outside of CT on military orders?
If so, per the MRSAA should/could I also have CT as my state of residence for tax purposes while living in MD and how would that effect my taxes?
