About a dozen military personnel I prepare taxes for are confidently under the impression that they can elect any state they want as their filing state. Am I missing something?

Forum|Forum|5 years ago
March 25, 2021
28 replies
43 views

Most of these clients are showing FL or WY as box 15 on their W-2's from the Navy/Army. They will get absolutely crushed with taxes if we accurately adjust where they are currently living, but I do not see an alternative.

My understanding is that when enlisted, you have a state of legal residence, as well as a home of record (HOR)...

The only thing I have read is from "military.com" (not the IRS website) stating "Generally speaking, military personnel are subject to tax in their "home of record," which is the state where they resided at the time of their enlistment or commissioning."

Thanks in advance guys. First post on here so not really sure what kind of activity it will get.

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sjrcpa

Level 15

The military people know what they are doing. Their wages are not subject to tax in the place where they are stationed. Taxable to their home of record - and mostly that will be a nontax state.

The more I know the more I don’t know.

T

The-Tax-Lady

Level 8

I have seen many errors on the Military website and when I contacted them, I was told they are not tax advisors and the information posted is merely that, informational, even if it is wrong. I believe this is where that oxymoron, "Military Intelligence" is applicable.

As sjrcpa said, a servicemember does not pay State tax if he is not stationed in his home State.

Each State is different in how they tax Military pay. Ohio, for example, has a special IT- 4 Withholding form for the military which excludes any State or School District tax withholding when stationed outside of Ohio.

Review the State regulations for where your clients call home.

M

msl217Author

Level 3

Got it. The state by state piece (duh, whats wrong with me) is what I was missing.

Per NYS website: "If your permanent home was not New York State when you entered the military but you were assigned to duty in New York State, you do not become a New York State resident even if you have a permanent place of abode here. You are a nonresident and your military pay is not subject to New York State income tax."

Follow-up question, if you do not mind: the client's HOR is Florida. He moved to NYS for a W-2 job, not for military purposes. He still performs duties for the Navy, though when he performs those duties he travels to a different state.

Does that make this any less clear in your view?

BobKamman

Level 15

What you may have is a specific situation in which the Navy pays for medical school in return for a commitment to continue service in the Navy. Medical school requires a residency, which the military cannot provide. So he is still in the Navy, but completing his requirement for the M.D. by working for a non-military employer. Have you asked him, if that's what happened? Otherwise we are all blind people trying to describe an elephant.

If he is a resident, then he is a nonresident. Which is to say, if the purpose for his working in a New York hospital is to complete his Navy-financed education, then he did not become a New York resident.

qbteachmt

Level 15

"Have you asked him"

Oh, wow. Great idea.

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