OSJA explains legal residency, home of record
February 21, 2013
FORT RUCKER, Ala. (February 21, 2013) -- Benjamin Franklin wrote, "In this world nothing can be said to be certain, except death and taxes."
Nevertheless, most people go to extraordinary lengths to avoid both. Soldiers are no different. One way a Soldier avoids paying state income tax is to change his legal residence to a state that does not tax service members.
The Servicemembers Civil Relief Act protects a Soldier's pay from income taxes of the state in which the Soldier lives by reason of military orders. For example, a Soldier can be a legal resident of state A, even though he is stationed, by orders, in state B. State B taxes income, but the Soldier is not subject to state B's taxes. The Soldier is only subject to state A's tax structure, and state A does not tax income.
Legal residency, or domicile, is the place where a Soldier intends to return and live after she retires or is discharged from the military. It's the place that she considers her permanent home. A Soldier's legal residence determines what state tax laws apply while she is serving in the military.
Don't confuse legal residency with home of record. They are not the same. Home of record is specifically used by the military to determine travel entitlements when a Soldier separates from the Army. Your home of record and legal residence can be totally different.
Generally speaking, you are a legal resident of a state if you are physically present in the state, and intend to stay or intend to return to the state in the future. Actual physical presence in a state makes legal residency more certain. Other connections to a state help demonstrate legal residence as well, such as where you vote, where you received your driver's license, where your automobile is registered and where you own real estate.
One thing is certain: a Soldier cannot change legal residence to a state where he has no connections. The Soldier must have some minimum connections with the state that he intends to claim as his legal residence. If a Soldier claims a state that he has no connections with and he's only doing it for tax purposes, he is committing fraud.
You can have your legal residence in one state, even though you're serving as a Soldier in a different state. Please remember that you need connections with the state you intend to declare as your legal residence.
If you're interested in changing your state of legal residence, make an appointment with a legal assistance attorney in the OSJA's office to discuss. We cannot change your legal residence, but we can discuss some steps that you can take to prove which state is your legal residence.
Call 255-3482 to make an appointment. Our offices are located in Bldg. 5700, Rm. 320.