VA resident in military. $90K pay. Any breaks?

[schirallicpa]

I'm thinking she will just get hit with ordinary tax and is outside of any deductions in VA. But I have not prepared such a return before. Previously, she was my NY client. I know NY taxes military pay. She is not combat zone nor hazardous duty.

Just wondered if any VA's out there had insight. They didn't withhold any VA tax. She actually is stationed out of Rome NY, but has permanently moved to VA.

Any thoughts?

[Hahn1040]

IS your client active duty military stationed in VA?

Active duty military maintains home of record when PCS (permanent change of station)

see:

On December 19, 2003, the President of the United States signed into law H.R. 100, the Servicemembers Civil Relief Act. This law completely rewrites the

Soldiers and Sailors Civil Relief Act of 1940

, expanding many of the previous law's civil protections.

IF your service member was a resident of New York when she joined the military, then she remains a NY resident.

For New York tax info see:

http://www.tax.ny.gov/pdf/publications/income/pub361.pdf

IF your client is not in NY more than 30 days during the year, does not maintain a permanent place of abode in NY and does maintain a permanent place of abode in another state, then NY does not tax military pay.

Thus no NY tax NO VA tax.

[schirallicpa]

I appreciate your answer. But my lingering question is - how can she not have a state of residency. Doesn't she have to belong somewhere? She's certainly hasn't left the country.

[Hahn1040]

Confirm: She is active duty military?

if yes, then NY remains her home of record

Her W-2 says NY

However, NY does not tax her as a resident. that is while she is stationed out of NY

IF she gets order back to NY, then she is taxed as a resident again

[Hahn1040]

fyi:

many states do not tax active duty military pay while the resident is stationed out of the state:

NY, NJ, IL, CA, PA, OH, OK

to name a few. There are others- these are the ones I thought of off the top of my head.

For some they file as a resident with active duty pay excluded, others file as nonresident, some don't have to file at all if they do not have any state tax withheld

then there are states that give some exclusion or deduction:

VA if military income is under $30,000

MD for military stationed out of the country up to $30,000

others tax them the same as any other resident:

GA, AL,

the favorites with the military are the states with no income tax:

FL, TX, WA, TN

none of these lists are exclusive

Your best bet for finding out how a state taxes the military is to look on the state's tax website

Many states have a pub for military

THEN if the military member has a spouse, there is a whole set of rules for the spouse.

NEW law as of 11/11/09 : Military Spouse residency relief act:

http://www.journalofaccountancy.com/Web/20092342

[schirallicpa]

Again, I appreciate your help. Around here, I don't run into active duty military. Plenty of retired military and a handful of reservists. This was unique to me.

Have a good one!