Military

[Bouw]

I am an Alaskan resident (no state tax) and my spouse is a Virginian resident (state tax). Do we file together or married but separate?

[JotikaT2]

It depends.

If your wife resides with you in Alaska, she may not have to file a Virginia return.  

Under the Military Spouses Residency Relief Act, Virginia would not tax her income if she lives in Alaska with you.

See the attached link for more information on her potential filing requirement if she resides in Virginia.

VA military income

The option to file as married filing joint or married filing separately is an option if you determine she needs to file a Virginia return.  But be aware most times married filing joint will provide a better tax benefit as the standard deduction is higher.

[TomD8]

Due to a change last year in the MSRRA law, if you are the active duty service member and your HOR/SLR is Alaska, your spouse may choose to file in Alaska too, even if she has never lived there.  Since Alaska has no income tax, you wouldn’t have any state income tax return to file.

The only exception would be if you had non-military income in another state, or if your spouse had taxes withheld for another state.  In that case, your spouse would have to file a non-resident return in that state, showing zero income, in order to have those taxes refunded.

[Bouw]

Thank you so much. I wanted to clarify that my wife is the Alaskan resident and I am the Virginia resident and I claim VA on my SOR. Does this make a difference?

[TomD8]

Yes it does.  If your HOR/SLR is Virginia, you must file a Virginia tax return.  https://www.tax.virginia.gov/military-tax-tips

In the personal info section of TurboTax, enter VA as your State of Residence.  Your wife enters Alaska as her State of Residence.  She has the option of filing in VA (your SLR), or in her own domiciliary state (AK).  Obviously it is better for her to use her own domiciliary state, because it has no income tax.