Military Spouse Residency Relief Act helps military families
By , 460th Space Wing Judge Advocate
/ Published January 27, 2015
BUCKLEY AIR FORCE BASE, Colo.- --
Editor's note: This article was written to inform the military member and their spouse on the military spouse residency relief act.
In 2009 Congress passed a federal law allowing military spouses to claim the same state of residency as their service member as long as the military spouse has also established residency in the state.
If a military spouse establishes state residency in a state with the service member, the military spouse will be taxed at the tax rate of that state in all subsequent states the service member moves to with his spouse for the purposes of serving the spouse's military service.
The upshot is that if those spouses and the service member were stationed in a state like Texas, which has no state income tax, and you both establish residency in Texas, when you move to Colorado the service member will not pay income tax on their military wages and the service member's spouse will not pay taxes on wages from their civilian job, even though the wages were earned in Colorado. Conversely, if the military member and her spouse are residents of New York and they move to Colorado, the spouse could retain his residency in New York and would pay taxes on income earned in Colorado at the higher New York rate.
How does this work in Colorado? Spouses who can claim residency in a state other than Colorado may file a Colorado Form DR 1059 with the State of Colorado exempting their wages from Colorado withholding. The form is available on the State of Colorado Department of Revenue website.
This site also contains more detailed information on MSRRA.
Since MSRRA is a relatively new law, many state employers are unfamiliar with its requirements and may be doubtful when you approach them. A printout of Colorado's web page detailing MSRRA guidelines may be helpful in this case, but if you encounter problems, please visit your legal office for assistance. In addition, if you had taxes withheld from your wages in Colorado despite being able to claim a different state of residency, you can have those taxes returned to you by filing a Colorado state tax return and citing MSRRA. If you owe taxes to your state of residence for wages earned in Colorado, you will also need to file a joint tax return with your spouse in that state.
Notably, MSRAA does not permit you to choose any state of residency you want. You must have legitimately established residency in the state you wish to claim. If you have any questions about MSRRA or establishing your residency in a state, please contact your legal office at 720-847-8444.