Level 3

Maryland Qualified Civilian Spouse

Forum|Forum|6 years ago
March 27, 2020
2 replies
21 views

I have a couple of military clients in MD who got married in 2019. Service member's permanent residence is in another state. Per the Military Spouse Residency Relief Act, the spouse is allowed to claim the service member's state of residence, regardless of the date of marriage. MD has a Qualified Civilian Spouse exemption form (MW507M) that they say is required to be submitted for a taxpayer to be able to file with their spouse in another state. It also says that wages are only exempt from the exemption was approved, meaning that they would have to file two different states in the year of marriage. All of this is against what the MSRRA states.

Has anyone had experience with this in MD or another state for that matter?

This topic has been closed for replies.

RollTide68

Level 7

With the update to the Military Spouse Residency Relief Act the spouse can now claim the state of residence of the military member. Based on what you provided in your post the MW507M is like a W-4 for Maryland state tax exemption for wages. To be filed annually with the employer by Feb 15.

If the military member and spouse both do not pay Maryland state tax then they would not file a Maryland tax return. However if state tax was withheld and they would like to a refund then I would file as a non-resident.

If the state the military member and spouse claim as their state of residence requires a return then they must file that return as well.

rbynaker

Level 13

A quick Google search hit this site:

https://militarybenefits.info/military-spouse-act-residency-relief-msrra/

which says "The spouse does not inherit the domicile of the servicemember upon marriage"

Check your original assertions, I'm not sure they are correct.

itonewbie

Level 15

@rbynaker wrote:
A quick Google search hit this site:
https://militarybenefits.info/military-spouse-act-residency-relief-msrra/
which says "The spouse does not inherit the domicile of the servicemember upon marriage"
Check your original assertions, I'm not sure they are correct.

The site is correct in making that statement. 50 U.S. Code § 4001(a)(2)(B) refers only to "residence", not domicile. This would mean the spouse will still be on the hook for excise tax and whatever else that is tied to domicile, until and unless a new domicile is established in fact.

---------------------------------------------------------------------------------Still an AllStar

itonewbie

Level 15

Nothing on that form contravenes the Act. The exemption will be recognized after the form is submitted and the eligibility is verified based on the supporting documents submitted.

Just because the spouse can elect to file as NR doesn't mean the employer has authority to retroactively refund taxes that have been withheld to date, which is a matter governed by state statutes and there's nothing in the Act (before or after the amendment) that compels states to do so. The spouse would simply file an NR return to claim a refund.

---------------------------------------------------------------------------------Still an AllStar

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