The Massachusetts Department of Revenue (DOR) recently released a working draft of TIR 09-23, Effect of the Military Spouses Residency Relief Act or Public-Law 111-97 (the MSRRA). Under the MSSRA, spouses of military personnel who are present in or absent from a domicile due to compliance with military orders will not have their tax residence impacted by such presence or absence. According to the TIR 09-23:
For taxable year 2009, a servicemember’s spouse who had Massachusetts personal income tax withheld and who qualifies for exemption from Massachusetts tax under the MSRRA must file a Massachusetts non-resident income tax return, Form 1NR/PY, to claim a refund. For this purpose, the Form 1 NR/PY return must be paper filed; no efile returns are allowed. The qualifying spouse must write “MSRRA,” across the top of the Form 1NR/PY and attach copies of the following:
- Military Spouse ID card.
- Department of Defense Form 2058, State of Legal Residence Certificate – “legal residence for purposes of withholding state income taxes from military pay;”
- LES, Leave and Earnings Statement of servicemember; and
- Servicemember’s current military orders assigning such servicemember to a post of duty in Massachusetts (or an adjoining state).
The qualifying servicemember’s spouse must pay tax to the state of domicile for 2009, to the extent required by the state of domicile.
For taxable years beginning with 2010, a non-resident servicemember’s qualifying spouse whose wages are exempt from Massachusetts personal income tax under the MSRRA may claim an exemption from Massachusetts withholding tax. A military spouse who qualifies for Massachusetts wage exemption under the MSRRA must complete a Form M-4-MS, Annual Withholding Tax Exemption Certificate for Military Spouse, and provide required documentation.
The Form M-4-MS must be validated on an annual basis. The military spouse must show continued eligibility for the exemption. Scenarios that will cause the spouse to no longer be eligible include:
- Servicemember leaves the service;
- Voluntary physical separation due to duty changes – the servicemember’s orders move him or her to a location outside Massachusetts where the spouse is allowed to join him or her but chooses not to; or
- Spouse commits an action that clearly establishes Massachusetts as his or her state of domicile.
Contact Vision Payroll if you have any questions on the Military Spouses Residency Relief Act.