What is the best way to file taxes as dual military when we have different states as Home of Record?

2023-01-25T02:22:56-05:00

My wife and I are both active duty and married in March 2022. We are trying to figure out the best way to file this year and if anyone has been in this situation before. My home state is Maryland and her home state is Nevada. We are currently stationed in Honolulu, Hawaii

Response by Cpl Vic Burk made Jan 25 at 2023 5:51 AM

2023-01-25T05:51:07-05:00

SGT Private RallyPoint Member Does you home states even require you to file? While active duty my home state was Illinois. Illinois didn't have an income tax on people serving in the military so I didn't have to file.

Response by MSgt Private RallyPoint Member made Jan 25 at 2023 7:37 AM

2023-01-25T07:37:36-05:00

Best thing to do is talk with a real tax professional like H&R Block who has experience with military. In the past they would set up a little office on post at the PX/BX.

Response by SSgt Private RallyPoint Member made Jan 25 at 2023 9:22 AM

2023-01-25T09:22:43-05:00

option 1 VITA the on post tax assistance. 2nd pay a professional, 3rd online through software i know turbo tax (not endorsed) will walk you through questionnaires regarding residency for each state you choose to file with but you will have to go in and adjust the income for the state section as it commonly copies that info from the federal return.

Response by SP5 Peter Keane made Jan 25 at 2023 4:23 PM

2023-01-25T16:23:34-05:00

You pay income tax based on where you earn the income, not HOR

Response by CPT Lawrence Cable made Jan 26 at 2023 8:13 AM

2023-01-26T08:13:35-05:00

First, in most cases you are better off filing your Federal Tax Return as Married Filing Jointly. The tax brackets for Married Filing Jointly are double the single filing and it doubles the standard deduction to $25,900. That really means that your top tax bracket should be 12%. You will probably still have to file separately for taxes in your home of record if they have income tax, at least for the present tax year. If either state is income tax free, I would make that my home of record.

Response by MSG Private RallyPoint Member made Jan 26 at 2023 11:00 AM

2023-01-26T11:00:31-05:00

Don't use H&R Block or any of the big chain tax companies. Hit up a local CPA and they'll square you away. Just Google a CPA in your area and find one with good reviews. They're more thorough and will provide better individualized service.

Response by Lt Col Jim Coe made Jan 26 at 2023 12:52 PM

2023-01-26T12:52:53-05:00

I was a military tax advisor a while back, but you need to either use a tax professional or tax software. I've had excellent results with Turbo Tax for over 20 years.
Some things to look at and think about:
-Federal income tax is pretty much the same wherever you live in the US. In most cases you will file as married filing jointly. You might file separately if one person has exceptionally higher income than the other or complex state filing issues for one person, but not the other. Usually, rare.
-State taxes can be complicated
--Your state residence can be where you physically live, HI, or your home of record MD or NV
--Check DEERS to determine what the Service thinks your home of record is
or look on you monthly pay statement.
--Determine if HI, MD, or NV tax military pay and if any require filing a state return if you're in the military.
--Decide if you or spouse have done anything in 2022 that would change your legal residence to HI, such as registering to vote, getting a HI driver's license, owning property, tagging a car. If you have done some or all of these things, then HI might consider you a resident. You'll have to check state law about a non-resident doing these things. This is where the advice of a lawyer or tax professional, online or in person, may be needed.
--Determine the most advantageous state tax situation for you and your spouse. You may have to file separate state tax returns because you both might be partial-year residents of HI and MD or HI and NV. Best situation is probably to file as a military resident of MD for you and a military resident of NV for your spouse. Then if required you can file HI as a non-resident military member.

For 2023, either both become HI residents or keep your current state residency. To change your residency, do some of the things I noted above; drivers license and tag car are easiest. Then work with your S1 to change DEERS and DFAS. If you change to HI, then you'll be able to keep it until you ETS or PCS to a more advantageous state like Texas or Florida where there's no income tax.