Here's a explanation of why you might need to pay California state taxes despite your husband's military status and Arizona residency:
- The MSRRA allows military spouses to maintain their state of legal residence for tax purposes, even when they move due to military orders
- However, certain conditions must be met:
- The service member is living on military orders in a state that is not their resident state
- The spouse is in that state solely to live with the service member
- Both the service member and spouse have the same resident state
- Despite the MSRRA, if you earned income in California, you might still be subject to California state taxes on that income
- California taxes nonresidents on income earned within the state, such as wages from a job in California
- California may require you to file a return if you have California-sourced income. Military pay isn't California-sourced income.
- California income can be from:
- Non-military wages
- California sales
- Rental property
Steps to Address This
- Verify Residency:Ensure you meet MSRRA conditions to claim Arizona as your state of legal residence.
- File Nonresident Tax Return: If you earned income in California, you may likely need to file a nonresident tax return to report California-sourced income and pay taxes due.
