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Lev
Lev, Tax Advisor
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I am an Army Reserve soldier called to active duty out of state

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I am an Army Reserve soldier called to active duty out of state for the last year. I had a fairly large amount of leave from my civilian job saved up and received income from that job by taking leave. The state in which I worked this entire year, Alabama, has a much lower tax rate than my home state, Maryland. We had to move here, so all my military wages are taxed at Alabama rates. My question is: must the income I made by taking leave from my job in Maryland be turned in on a Maryland tax return, or can I turn that in on our Alabama return--and pay Alabama tax rates on it? We have not lived in Maryland since Sep 2007. A follow-on question would be, if we can turn it on for Alabama, how do we get back the money Maryland already deducted? Thanks.
Submitted: 5 years ago.
Category: Tax
Expert:  Lev replied 5 years ago.

Please refer to the IRS publication 3, Armed Forces' Tax Guide - http://www.irs.gov/pub/irs-pdf/p3.pdf

 

Generally as you are on active duty - you are taxed based on your home of record. If you were called to active duty out of Maryland - you are considered a resident of Maryland.

Your "state of legal residence (SLR)" is your home of record.

 

If you was a resident of Maryland , but worked in Alabama - your wages are taxed for both - for Alabama because this is income from Alabama sources and from Maryland - because you were a resident of Maryland.

For Alabama you need to file a tax return as non-resident, and for Maryland you would file as a resident, but to avoid double taxation of the same income - you would claim a credit for taxes paid to Alabama.

 

If you want to change your state of legal residence (SLR) - you should submit US Department of Defense the form DD 2058 "State of Legal Residence Certificate" - http://www.dtic.mil/whs/directives/infomgt/forms/eforms/dd2058.pdf

 

Customer: replied 5 years ago.

Bringing in home of record makes this even more interesting... our home of record is Kentucky. We only lived in Maryland a few months, and we are supposed to go back to Kentucky when we are done here. Do we file non-resident for AL and MD, and resident for KY, with no income?

Expert:  Lev replied 5 years ago.
For the time you are on active duty - that is correct - your "state of legal residence (SLR)" is your home of record.
Customer: replied 5 years ago.
Hate to keep bothering you. I'm still a bit unclear on my original question. Is there any way to pay home-of-record tax instead of Maryland tax on the leave income earned since I neither lived nor worked in Maryland during this entire year?
Expert:  Lev replied 5 years ago.

If you neither life nor work in Maryland - that is not considered an income from Maryland sources - and therefore - this income would not be taxable in Maryland.

 

If your employer marked in W2 that income as taxable in Maryland - you need to ask about correcting W2.

 

Please feel free to ask if you need any clarification.

 

Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22617
Experience: Taxes, Immigration, Labor Relations
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