SCHOFIELD BARRACKS, Hawaii - Already this year, our Hawaii Army Tax Centers have processed more than $2 million worth of refunds and saved the military community more than $500,000 in filing fees.
This year, taxpayers have until April 18 to file their 2010 tax returns and pay any taxes due because Emancipation Day, a holiday observed in the District of Columbia, is April 15.
Taxpayers requesting an extension will have until Oct. 17 to file their 2010 tax returns. Visit www.IRS.gov, call (800) 829-1040 or visit a taxpayer assistance center.
Our local tax centers field three questions more than any other: "How do I determine my state of residence/domicile'," "Does my state tax military pay'" and "Does my spouse automatically have the same domicile as me'"
What is a domicile, and what is your domicile'
Soldiers fill out a DD Form 2058, State of Legal Residence Certificate, to indicate which state should withhold income taxes when they process through finance. Determining domicile is a combination of a physical presence in a state and the intent to permanently reside there.
A variety of indicators determine whether Soldiers should be claiming a particular state as their domicile, including where they were born, where they are registered to vote, their oral or written intent to claim a state as domicile, their physical presence in the state, their immediate family's state of residence, where they pay income and personal property taxes, and where they own land, houses or other property.
Soldiers do not lose their state of legal residence solely because they physically leave the state for military orders. They also do not gain residence in a new state solely because they are physically present in that new state on orders.
Soldiers are cautioned to consider the impacts of falsely claiming a state as their state of domicile. If Soldiers claim a state without having been physically present in the state and having the intent to permanently reside in that state, they could face fines, penalties, and civil or criminal charges.
Soldiers also should consider other impacts that changing their residence will have, including registering vehicles, registering to vote, the ability to gain in-state tuition rates at colleges and the amount they will pay in income taxes to their old state of domicile versus what they would pay to the new state of domicile.
State taxes on military pay'
States tax income differently, particularly for members of the military. Hawaii has a high state tax rate, at 11 percent for a married couple making more than $400,000. But that high bracket will not affect many military personnel, and their tax rates in Hawaii could be lower than in other states.
What about my spouse'
Service members' spouses may claim the service member's state of domicile, if they are also a resident of that state at the time the service member leaves the state pursuant to military orders. For example, if they are both Texas residents when the Soldier receives orders and does a permanent change of station move to Hawaii, both can continue to claim Texas. However, if the Soldier is single when leaving Texas, meets a civilian that is a Hawaii resident and they get married, the spouse cannot claim Texas.
Tax Centers at Schofield Barracks and Fort Shafter are open Monday-Friday, through April 29th. Call 655-1040 to make an appointment at Fort Shafter. Walk in for help any time between 7 a.m.-4 p.m., at Schofield Barracks. Search "Hawaii Army Tax Centers" at www.facebook.com for more information or tips.
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