Military servicemembers serving in compliance with military orders and their spouses may each elect to use any of the following as their residence for state tax purposes: (1) the residence or domicile of the servicemember, (2) the residence or domicile of the servicemember’s spouse, or (3) the permanent duty station of the servicemember.
See Residency Status for information on determining your residency or domicile.
If you are eligible to make a military residency election and wish to elect to use another state for state tax purposes, no action is necessary in Virginia to make the election. Each state has its own laws regarding the imposition of income tax. You should contact the state you elect to determine its requirements. While no action is required on your part with Virginia to elect another state, action may be necessary (as explained in the next two paragraphs) as a result of your election. In addition, we may contact you by mail to ask what state you elected. If the state that you elected has a state income tax, we may ask you to show that a return was actually filed with that other state or that no return was required.
If you elect to use a state other than Virginia for state tax purposes and your income is exempt from Virginia income tax, you may change or stop your Virginia income tax withholding by submitting a revised Form VA-4 to your employer. If you already had Virginia income tax withheld from such income, you may file Form 763-S, Virginia Special Nonresident Claim for Individual Income Tax Withheld to request a refund.
If you elect to use a state other than Virginia for state tax purposes and your income is not fully exempt from Virginia income tax, you must file a Form 763 to report and pay Virginia income tax on any income that is not exempt.
To determine if your income is exempt from Virginia income tax, please see "What type of income is/is not covered by the military residency election?" below.
No. The servicemember and the servicemember’s spouse may each make their own election regardless of what state their spouse elects.
If a military servicemember either begins or ceases to serve in compliance with military orders during the taxable year, such a military servicemember and their spouse may only claim the military residency election during the time the military servicemember is serving in compliance with military orders. Under no circumstances may the military residency election be applied outside of the time period the servicemember was serving in compliance with military orders. Those who have made a military residency election to use a state other than Virginia for state tax purposes may be required to file Form 760PY, Part-Year Resident Income Tax Return (see Form 760PY Instructions for more information), for the portion of any taxable year in which the military servicemember was not serving in compliance with military orders.
If a servicemember and spouse have elected to use another state as their residency for state tax purposes are divorced during the taxable year, neither the servicemember nor the former spouse are required to file Form 760PY, provided the service member serves in compliance with military orders for the entirety of the taxable year, both before and after the divorce. A Form 763 may still be required to be filed by the servicemember, former spouse, or both of them for the year of the divorce depending on the type of income that they receive.
In years subsequent to the year of the divorce, the servicemember's former spouse will not qualify for the military residency election, and he or she will be required to file a Form 760, Form 760PY, or Form 763 based upon the normal filing rules.
No. The election only applies to the servicemembers and their spouse.
For servicemembers, the election applies to military service compensation. It does not apply to other sources of income such as wages from a part-time job, or a business or trade conducted in Virginia.
For servicemember spouses, the election applies to income from services performed in Virginia. A spouse’s income from self-employment may or may not be covered by the election. Such income would be covered by the election only if the predominant source of the business’ income is from the spouse’s performance of services. Factors such as whether the business employs significant capital or has employees are considered when determining if the business’ income is predominantly the result of the spouse’s performance of services. It would not apply to investment income.
If a servicemember or the spouse of a servicemember has income from Virginia sources other than those covered by the military residency election, they are required to file a Form 763, Nonresident Income Tax Return.
Yes. As you have elected to be a resident of Virginia for state tax purposes, you are subject to Virginia income tax on your income from all sources. For details on filing requirements for residents, refer to the Instructions for Form 760, Virginia Resident Income Tax Return.
If your servicemember spouse and you elect to use another state for state tax purposes, and you are currently living in Virginia pursuant to military orders, an assignment to a combat zone is generally a temporary change of duty station. Therefore, unless otherwise specified in the orders, your spouse would still be permanently stationed in Virginia. Under those conditions, your military residency election will still be valid.
Each state has its own laws regarding the imposition of income tax. You should contact the state that you have elected to determine its requirements.
No, federal law does not require the service member and spouse to live in the same state as the permanent duty station. Instead, federal law requires that the servicemember is in the state to comply with military orders.
Yes. The election applies to personal property tax as well. Personal property taxes are administered by Virginia localities, not by our agency. As a result, you should contact the locality that you are in to determine its requirements.