Tax Instructions Booklets don't instruct! :P

[BeenThere...DoneThat...]

...so we are confused because the tax booklets are confusing... shocker...


...the Military Spouse Residency Relief Act says spouses don't have to file for a "host" state during military orders... the California 540 tax booklet says that the MSRRA only "may" apply to spouses, then goes on to talk about charts and excluding the soldier's income and cross-checking to see if you are domiciled in a community property state and filing half of the military wages, anyway...

...doesn't the MSRRA apply? Period. No cross-referencing necessary?

[vonna]

The MSRRA is really confusing. But, the spouse cannot automatically claim the same state of residency as the service member.  Every state is different and has established rules of residency.  Oftentimes state residency can be established by registering to vote, or registering your car.

Here is a good overview of MSRRA:

www.militaryfamily.org/get-info/money/what-is-the-military-spouse.html

Also, your base legal office should have specific information for establishing residency in the state you are currently located.

Another good resource is Military OneSource.  If you sign up for that (free to active duty members and their family members) they should be able to help with state-specific questions, as well as state income taxes.

www.militaryonesource.mil/

Good luck, it is NOT clear-cut at all.

[vonna]

Also, have you checked out California Pub 1032 Tax Information for Military Personnel?

"This publication contains important information regarding nonresident military spouses covered under the MSRRA."

www.ftb.ca.gov/forms/2013/13_1032.pdf

[taxref]

"...doesn't the MSRRA apply? Period. No cross-referencing necessary?"


As stated by Vonna above, the MSRRA does not provide a simple yes or no answer regarding the non-military spouse's resident state.  There are many ifs, ands, and buts involved.  

One basically has to figure it out, within the framework of the MSRRA, ones own circumstances, and the rules of the states involved.

[BeenThere...DoneThat...]

...I think that the first 1032 consulted was an older version... the new one seem a bit more clear, but only a bit... my friend definitely has all paperwork, taxes, voting, car plates, etc. with the home state... move to move, they're always residents to the home state... the job in CA lasts only until they get moved again to the next base... but you'd think with my education that I could read and figure out a stinkin' tax booklet made for the masses... it's almost embarrassing... I appease my ego with the reminder that it's published by the feds...

[mwcpa]

instead of blaming the employees of tax departments you may want to turn your frustration at laws that the common person cannot understand to those who wrote them.... senators, congress people, legislators, etc.... and blame yourself for electing them over and over (my guy is the best, it's your guy who is the problem.... with most of the country believing that it's a wonder it took so long for Congress to be so dysfunctional)...

[Otto the Orange]

Free tax help from Military one source--ask them

google it

I use it every year when I file my taxes using their free H&R block program they give to military

[rangerj]

While the subject is on military tax issues let me throw this out. The usual Statute of Limitations (SOL) is three years from the due date of the return, or a later date if the return is filed after the usual due date (4/15). The SOL may be extended for situations where a military member has retired and taken a lump sum and later gotten a disability determination from the VA. The SOL is the later of the usual three year date or one year from the date of the VA disability determination. Taxes paid on the lump sum can be recovered, on the amount determined by the VA to be for the disability, by filing an amended return before the SOL expires. Congress made this SOL change in 2008. I do pro-bono tax work for disabled police officers, firefighters, and military retirees. I have filed numerous amended returns where the so called tax professionals have told these folks that their disability pensions are taxable simply because the payor issued a 1099, or in the military cases that the SOL had expired because the VA took several years to make a determination (this is one reason Congress made the law change).

[Savoir Faire-Demogague in NJ]

Apr 12, 2014 5:42:04 GMT -5 mwcpa said:

instead of blaming the employees of tax departments you may want to turn your frustration at laws that the common person cannot understand to those who wrote them.... senators, congress people, legislators, etc.... and blame yourself for electing them over and over (my guy is the best, it's your guy who is the problem.... with most of the country believing that it's a wonder it took so long for Congress to be so dysfunctional)...

I could be wrong but regulations, including tax regulations are not actually written by congress but by the egg heads in the individual agencies including the IRS.

Agency staffers interpret the code and then compose instructions on how to follow the code. Many times this publications are wrong, as we just found out with the IRA rollover ruling that just came down.

[TheOtherMe]

IRS employees are not egg heads.  

[rangerj]

The writing of the Regulations for the U.S. tax code is the responsibility of the Treasury Department. That is not to say that they IRS does not participate, because they do. The Treasury employees, including IRS employees, look at the Congressional record for the intent of Congress in the writing of the regulations. Then during the "comment" period all interested parties get their say, e.g. the ABA, AICPA, and business or other interested parties that may be affected by the regulations. Look back at the origin of the IRA and see the numerous times Congress had to rewrite the statutes in order to get it to do what Congress wanted. Six or seven times Congress would write the IRA laws and when the Proposed regulations were issued they would rewrite the law because what they wrote was not what they intended. Look how many times the ACA has been adjusted by Executive Order, rather than by Congressional change in the law. This is a different matter, but the concept is the same, that is the law needs to be "tweaked" in order to be workable as intended (if ever), AND this is clearly not the fault of the Treasury Department, including IRS employees, line employees. Out of the mouths of Congress, ALL sides, they say simplify the tax code, and then they talk about wanting to add credits and deductions to stimulate the economy.   I cannot wait to see the regulations on the ACA.