Does my wife have to file NM taxes? I am active duty stationed in NM but a MT resident. My wife was a TX resident when we got married and she moved to NM to be with me.

[dferron]

She is working and living here in NM and has been for the last 18 months. Not sure if she qualifies for MSSRA or not, or if she should be tax exempt.

[ToddL]

Under the "Military Spouse Residency Relief Act" (MSRRA), your wife is not subject to NM state tax on her income from NM. 

If her employer is withholding NM state tax, she should contact her employer's payroll department or preparer and submit New Mexico / Form RPD-41348.

Active-duty military and their spouses are considered to live in their state HOR no matter where they are stationed. Their active-duty pay and the spouse's civilian pay are considered to be earned in their respective state home of record (HOR).

When she completes the Personal Interview ("My Info":

1. Select TX as her state of residence;
2. Answer "No" when asked if you "Lived in another state in 2017?" That question only applies if you changed your state of residence in 2017.
3. When asked if you "Earned money in another state?", answer "No".

The program should prompt you to prepare a non-resident NM state return. If you answer all the interview questions correctly, you should get a full refund on NM tax withheld.

 What is my military "State of Residence"?

 State Military Filing Rules