Legal Residence Confusion

[PANDAsn1p]

I am Active Duty Military, In 2019 I enlisted out of California, spent the rest of 2019 and the first 4 months of 2020 in California for training. Then I had a PCS to Oklahoma, where I remained for the remaining 8 months of 2020.

Meanwhile, back home, my family changed their residence, from California, to Arizona during 2020. I am very confused on what state taxes I need to file, especially in regards to what, after all of this, is my true legal residence. 

[KrisD15 · Accepted solution]

Please answer the interview questions in the "My Info" section of the TurboTax program carefully and the program will figure that out for you. You will need to click the link that asks if you and/or your spouse are serving in the military and then specify your state of residence. 

Since you enlisted while a resident of California, California is considered your "Home of Record". That will not change and does not affect your taxes. Your "State of Residence" DOES affect your tax filing. As a member of the military, you have an option of claiming your State of Residence and that is the state that you will file for, no matter where you actually live during the year. You make this election through the Military personnel office. 

In your situation, it sounds like California was your state of residence. You being stationed in Oklahoma has no bearing at all on your (or your spouse's) taxes. If you earned income while in Oklahoma, that income will be taxed by California. If any Oklahoma tax was withheld, you would file an Oklahoma tax return only to get that tax refunded. (Then you would file a California tax return and claim that income.)

You say "my family changed their residence, from California, to Arizona during 2020", so if you no longer expect to return to California, but you do expect to return to Arizona to be with your family, you would change your state of residence to Arizona and file for that state going forward. 

It is unclear if family means spouse or parents. If you are filing as Married Filing Jointly, and you elect to claim Arizona as your new state of residence, any income earned by you or your spouse before the move, will be taxed by California. Earnings after the move would be taxed by Arizona. Again, the TurboTax program can work the numbers if you carefully file Arizona then California and enter the amount of income earned in each state. 

Below is a link that explains more:

 Please click here for information about State of Residence

Thank you for your service.