Florida Military Resident Stationed in NY; Spouse Residency Question

[Florida-Military-Man]

Hi All,

As the title suggests, I'm a Florida Resident, now stationed in NY. In the 4 years my wife and I spent in FL, my wife changed her residency to FL, (ironically enough from NY) but never changed/updated her NY drivers license. I know a drivers license isn't an indication of residency, but every year that we lived in FL, I claimed her as a FL resident. We bought two houses (both in her name as well) in that time, and 3 different vehicles all obviously in FL, with the vehicles being registered in FL. 

When I got orders to NY in 2017, I continued to claim us both as FL residents, as is my right within the SCRA and her right within the MSRRA. For 3 years; every year when I filed our taxes, I filed a married filing joint state return in NY as non-residents and they gave her back everything she paid in state income taxes. In this time-frame she renewed her NY drivers license.

Then the hiccup happened. My wife had a friend tell her to apply for New York State: Pandemic Unemployment Assistance. She happened to be pregnant in 2019, and her pregnancy was considered high-risk and with Covid-19 on the horizon, her doctor told her to not go back to work. So she obviously qualified for it. Problem is she did not tell me she applied. I just happened to wake up one morning to $35,000 in my checking account. From that year on, I've claimed her as a NY resident. I don't even want to think about the red flags that would cause if I attempted to continue claiming her as a FL resident after NY just gave her that amount of money.

My question is, at what point (if ever) can I begin claiming her as a FL resident again. I renewed my FL drivers license this past year, and both our vehicles are still registered in Florida. Did she immediately lose her MSRRA rights when I correctly allowed NY to start claiming her income? This whole situation is confusing to me.

When I file our Federal return Married Filing Jointly, NY's State Taxes tries to include my income as well on the NY State Tax filing. As you can imagine, being a FL resident with no state income taxes, NY looking at my income immediately put their hand out to collect all the taxes I didn't pay to them throughout the year. If I correctly deduct my income from the collective amount from my wife and I (as I've done for the last 3 years), they still want her to pay (albeit much less). I apologize if I'm asking more of a MSRRA question, but I've been sitting here for weeks with our taxes complete, and don't want to click submit on the state return. 

[DaveF1006]

It depends. Did you file a DD-2058 with the military changing her Legal residence from Florida to NYTS? If not, you are not obligated to file a NYS tax return again if you or your wife does not have NYS sourced income.

If you did file the DD-2058 changing the State of legal Residence (SLR) from Florida to NY, then you will need to refile this form to change back the SLR from NYS to Florida.

[TomD8]

Section 302 of the VBTA of 2018 gives the spouse of an active duty servicemember the option to file taxes as a resident of the servicemember's State of Legal Residence (SLR), even if he/she has no other connection to that state. 

https://www.congress.gov/bill/115th-congress/senate-bill/2248/text#:~:text=in%20military%20service.-...

If she does this, she may qualify for a military spouse exemption from New York taxes. 

https://www.tax.ny.gov/help/taxpayer-education/tax-basics-military-personnel-veterans.htm

[Florida-Military-Man]

Dave, 

A DD-2058 was never filed on her behalf. It was never filled out for her when we lived in FL or  when we moved to NY. What I’m really concerned with is the New York State Pandemic Unemployment Assistance. I’d imagine as a Florida resident she wasn’t eligible to apply for any NY State Aid. For that reason, since 2020 I’ve been claiming her as a NY resident. She has NY income. I do not. My question was more-so if there was any reason she has to keep claiming NY. I’d imagine applying for NY Aid, forced her to become a New York resident. To clarify, for our first 3 tax years back in NY, she had NY income and I claimed her as a nonresident and we got all of her taxes back from NY. For the last 3 years however (since she claimed the NY State Pandemic Unemployment Assistance), I’ve claimed her as a NY resident. Is there a timing requirement for how long she has to claim NY, before requalifying as a FL resident? I don’t want to raise any red flags, and Id imagine being granted $35,000 from New York, only to switch back to being a Florida Resident 3 years later might raise some questions; despite the fact that Florida is indeed, the place we will be returning too when I retire. If she lost her right to claim Florida as her home of record due to claiming New York State benefits, I understand. I’m just confused about what rights she had with the MSRRA. Thanks again.

[DMarkM1]

There does not appear to be any time requirements on the spouse electing to have the same resident state as the active duty military spouse.  Here is the NY reference.  

There is a rule there that states, " However, the exclusion from being considered a resident for tax purposes does not apply to a military spouse who was domiciled in New York State at the time he or she marries the servicemember."  

So NY may ask questions when your spouse was a NY resident in prior years and now is not.  

Again, you are within the rules for your spouse to elect your state of residence and be exempt from NY state taxes on her wages earned in NY.      

[TomD8]

I would point out that the NY tax bulletin cited by @DMarkM1 is from 2010, and the VBTA was signed into law in 2018.  Note also that section 302 of the VBTA applies specifically to residency for tax filing purposes.  It may not apply to residency requirements for other purposes, for example eligibility for in-state tuition.