Texas Residency Question

[kas750]

I am active duty military and my wife is considered a nonmilitary spouse. We are stationed in Texas and my wife has been working in Texas for a year. My home of record is Oklahoma. I am trying to determine whether or not she is technically a Texas resident due to the fact that Oklahoma is trying to tax her income even though she lives and works in Texas. I'm aware of the MSRRA. Looking at what it takes to be a Texas resident on the state website, she has numerous documents that can prove this residency. My question is, for tax purposes, does the simple fact of having those documents and items qualify her for Texas residency; therefore, she does not have to file with me? The Turbo Tax phone line operator told me they can't help since it is a state tax question and not a federal issue. 

[MaryK1]

If your wife was a Texas resident she does not have to claim the MSRRA to be an Oklahoma resident.  The purpose of the law is to make filing taxes easier for military and their spouses, but if you choose not to use MSRRA, you would have to file the state returns as required (in this case because Texas has no income tax you do ot have to file).

From the Oklahoma tax website (https://www.ok.gov/tax/faqs.html#q2369:(

When the spouse of a military member is a civilian, most states, Oklahoma included, allow the spouse to retain the same legal residency as the military member. They file a joint resident tax return in the military member’s State of Legal Residency (if required) and are taxed jointly under nonresident rules as they move from state to state. If the nonmilitary spouse does not wish to retain the allowed residency of the military member, then the same residency rules apply as would apply to any other civilian. The spouse would then comply with all residency rules where living.

[Carl]

First understand that the SLR for a non-military spouse does not change when they marry active duty military.  It's not something that occurs automatically. So if your spouse's SLR was OK before they married you, then it's still OK now until physical action is taken to change it. I note you also don't mention what your HOR is. I can't assume it's TX just because you're stationed there. 

In a nutshell, MSRRA doesn't help since TX does not tax personal income anyway. So OK can (and will) tax the non-military spouse on all of her income. That's the bottom line at this point. 

You can check with base legal and you'll find I'm right. I realize tax season is over and the free tax help may no longer be available at the legal office. But you won't know if you don't at least call and ask. 

Now for your federal return, you will and should file as MFJ no matter what. If you file separate, you will both automatically lose quite a number of deductions and credits you may otherwise qualify for. 

[Carl]

"My home of record is Oklahoma."

What is your spouse's SLR? (State of Legal Residence). OK also? If so, then all of her income from all sources is subject to OK state tax, regardless of where she earned it on the planet. MSRRA does not apply since TX does not tax personal income. As far as changing one's SLR, it's not that easy or simple, and in most cases can not be done retroactively more than 12 months back at best. More than likely, this won't fly for the non-military spouse. That's because your spouse is included on your PCS orders assigning you to Texas. Therefore the spouse moved there with you for the convenience of being with their AD/MIL spouse. Now things are different if the non-military spouses SLR is not Oklahoma.