Residency Confusion Can Cause Military Personnel to Overpay Taxes
H&R Block Advises on Military Spouse Residency Relief Act, State Tax
KANSAS CITY, MO -- (Marketwire) -- 11/12/12 -- Confusion about
military spouse residency rules means many military families may be
overpaying their state taxes, according to analysis done by The Tax
Institute at H&R Block (NYSE: HRB). The institute says understanding
eligibility for the Military Spouse Residency Relief Act can help
service members pay only what they owe and keep more of what is
"Lack of guidance on eligibility for the new rules can cause military
families to needlessly file tax returns and pay taxes to states they
live in temporarily due to military orders," said Kathy Pickering,
executive director of The Tax Institute. "Misinterpretation of the
law has likely resulted in many service members and their spouses
paying state taxes they didn't owe."
Service members often retain residency status in their home states,
despite frequent moves during active duty. The act, which became
effective tax year 2009, allows spouses to also retain residency
status in their home state if they move with their military spouse.
Under these rules, the spouse's pay earned where they are stationed
is not taxed there, but instead in the home state.
A civilian will not automatically be granted the same residency of
their service member spouse. Instead, residency must be declared and
the spouse must meet these three requirements to qualify for relief:
-- The spouse moves with the service member to the duty state in
compliance with military orders
-- The spouse is living in the state solely to be with the service member
-- The spouse and service member share the same home state.
Before attempting to change their state of residency, military spouses
should contact their state taxation board or department of revenue.
Because each state has different tax regulations and filing
requirements that will help spouses determine if they meet the act's
Military spouses who meet the requirements should ask their employer
to withhold state income tax for their home state of residency. This
will eliminate the need to file a return to obtain a refund of taxes
withheld for the state wher
e the service member is stationed.
"If errors were made on past returns, the good news is that overpaid
taxes can still be recovered going back to 2009 when the act went
into effect. This is because amended returns for tax year 2009 will
be accepted through April 15, 2013," Pickering said.
If a service member thinks errors were made on past returns, amended
returns can be filed for the past three years, which includes 2009,
2010 and 2011 income tax returns. One way to find out is to get a
free Second Look(R) review* with an H&R Block tax professional. H&R
Block is offering free Second Looks through Dec. 31 to ensure
taxpayers received the maximum refund possible. This offer is good at
participating offices for the review of returns not prepared by H&R
Block. New this year, taxpayers can get a Second Look from the
comfort of their own homes with the secure, video conferencing tool
Many H&R Block tax professionals are specifically trained and
educated to assist military families with preparing their tax
returns; last year, H&R Block filed tax returns for more than 40
percent of active, reserve and retired service members. For more
information about this state income tax information and other
military-specific tax concerns, visit http://hrblock.com/military or
call 800-HRBLOCK to find a nearby tax professional.
*At participating offices through April 30, 2013. Fees apply if you
have us file a corrected or amended return. Results may vary. All tax
situations are different. OBTP#13696 Copyright2013 HRB Tax Group,
About H&R Block
H&R Block, Inc. (NYSE: HRB) is the world's largest
tax services provider, having prepared more than 600 million tax
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About The Tax Institute at H&R Block
The Tax Institute at H&R Block
is the go-to source for objective insights on federal and state tax
laws affecting the individual. It provides nonpartisan information
and analysis on the real world implications of tax policies and
proposals to policymakers, journalists, experts and tax preparers.
The Institute's experts include CPAs, Enrolled Agents, attorneys and
former IRS agents.
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