I have a New York state driver%26#039;s license and while I was in the Marine Corps I was charged income tax by NY even while in Japan. Now Im living in Oregon and I%26#039;m wondering if I will be charged income tax from both NY and OR. How do I avoid this? Should I go get an Oregon driver%26#039;s license? Is there a form to fill out or something? Anyone who has an answer thank you.|||Lady was close but no cigar. If you are in the military you can chose your state of residence (as long as you meet the requirements for that state). It is not restricted to the state you resided in when you enlisted.
In your case, both Oregon and New York have an exclusion of all or part of active duty military pay, calculate which state would benefit you most. Most bases offer free help for filing taxes. Of course this will only help you in the future after you change your state of residency with the Marines...if you change it mid year you will have to file a return in both states.
Further, if you are ever in a situation to establish residency in a state that either has no income tax or one that doesn%26#039;t tax military pay...it would be worth while. Once you establish the residency you can keep it as long as you remain in the military regardless of where you are stationed.
Unless, you have a second job you will only have to file a NY tax return and not an Oregon return.
Hope this helps.|||If you are in the military, you have to do federal taxes from whatever state you lived in when you joined. And you do NOT do taxes for where you are stationed.
So, if you are stationed in Oregon, but your home was NY, you ONLY do NY taxes... however, if you are out of the military now and you moved to Oregon on your own, you ONLY do Oregon taxes, and NOT NY. This is regardless of where you get your license, actually. If you%26#039;re in the military, your home state is considered to be where you lived before you joined, unless you get a second job at your current location. As soon as you get out, your home state is wherever you move to.
I%26#039;m a military wife, and for years now, I%26#039;ve been stuck doing my husband%26#039;s taxes because he%26#039;s been deployed for tax season, so I know this very well.|||Active duty military retain their domicile regardless of where they are stationed. While you CAN change your domicile to the state where you are stationed, anything that happens prior to the change stands. Therefore while you could change your domicile from NY to OR today, it will NOT be retroactive! For 2008 you were a NY resident and MUST pay NY State income taxes.
In order to change your domicile, you must take positive actions to do so. Getting a drivers license in the new state is only one way to prove your change of domicile. The BEST documentation of change of domicile is registering to vote. Some GIs will get a local drivers license in the state where they are stationed simply because it%26#039;s easier to deal with that way. You have a local ID which makes it easier to write checks, you get less hassle from cops sometimes, etc. so merely getting a local drivers license isn%26#039;t always enough. Registering to vote is prima facie evidence of your intent to change your domicile. Once you%26#039;ve done that, you have to update your domicile on your military pay record. Your local finance office handles that.
Once you separate from the service, things change. If you were in the service when you arrived in OR and then separated in OR and remained in OR, you became an OR resident on your ETS. From that date forward, NY lost the right to tax your wages and OR gained the right. In this case, you would file part-year returns in both states, reporting only the wages earned while domiciled in the respective states. In this situation, not getting a local license doesn%26#039;t change the fact that your domicile changed since you are no longer covered by the Soldiers %26amp; Sailors Civil Relief Act once you separate.
On important caution on switching domicile while on active duty. If you separate and then immediately return to your former home state, they may treat the change in domicile as an attempt to evade state taxes. MA, VA, and CA are notorious for this. I%26#039;ve seen all three states look back at income over a 20 year military career and slam the former service member with a tax bill for the entire 20 years since there is no SOL for tax evasion. For this reason, it%26#039;s CRITICAL that you do not immediately return to your former home state upon ETS! The longer the gap in time between your ETS and your return to your former home state the better. I%26#039;ve seen folks successfully argue their case with as little as 6 months but a year or more would be better.
