Understanding the Military Spouses Residency Relief Act
The Military Spouses Residency Relief Act (MSRRA) is an important piece of legislation that aims to provide tax relief for certain spouses of active duty service members. Here’s a list of frequently asked questions to help you understand this law and its implications better.
FAQ 1: What is the Military Spouses Residency Relief Act (MSRRA)?
MSRRA is a U.S. federal law (Public Law No. 111-97, 123 Stat. 3007 (2009)) that was enacted on November 11, 2009. This act applies to all taxable years 2009 and beyond. It’s designed to provide certain tax benefits to civilian spouses of active-duty service members.
FAQ 2: Who does MSRRA apply to?
MSRRA benefits apply to civilian spouses who:
- Were away from their tax residence (residence or domicile) in one of the 50 States or the District of Columbia solely to be with the service member spouse serving in compliance with military orders in American Samoa, Guam, the Northern Marianna Islands, Puerto Rico or the U.S. Virgin Islands, and
- Maintained their tax residence in one of the 50 States or the District of Columbia, and
- Maintain the same tax residence as a service member spouse.
FAQ 3: What relief does MSRRA provide?
Notice 2010-30 provides eligible civilian spouses with an extension of time through October 15, 2010, for paying the amount of tax shown on a federal income tax return for the tax year ending December 31, 2009. Notice 2011-6 extends this relief to tax year 2010, and Notice 2012-41 further extends the relief to 2011 and subsequent years.
FAQ 4: How can civilian spouses claim MSRRA relief?
To claim MSRRA relief, eligible civilian spouses must mark “MSRRA” in red ink at the top of their tax return forms and include the Form W-2, or equivalent, received from their employers in the U.S. territory where they worked. Civilian spouses must mail these forms to the IRS Service Center indicated in the Form 1040 instructions.
FAQ 5: What changes were introduced by the Veterans Benefits and Transitional Act of 2018?
Under IRC 303(a)(2)(B) of the Veterans Benefits and Transitional Act of 2018, a civilian spouse of a service member may elect to use the same residence for taxation purposes as the service member, regardless of when their marriage occurred.
FAQ 6: How should a civilian spouse file when choosing married filing separately?
A civilian spouse choosing to file separately should also attach the following declaration:
“I am claiming ___________________ as my residence or domicile under the Military Spouses Residency Relief Act (“MSRRA”). Under penalties of perjury, I declare that I am qualified for relief under MSRRA because I am present in __________________________ solely to accompany my spouse who is a service member serving in compliance with military orders, and my claimed residence or domicile is the same as my spouse’s residence or domicile.”
FAQ 7: What is the Penalty of Perjury Statement?
Civilian spouses filing separately under MSRRA should attach a declaration known as the Penalty of Perjury Statement. This statement is a signed declaration asserting the civilian spouse’s qualifications for relief under MSRRA.
FAQ 8: Can a civilian spouse claim a tax refund under the MSRRA?
Yes, a civilian spouse claiming a tax residence in one of the territories under MSRRA can file a claim for refund. The refunds will be for income tax withheld and remitted by their U.S. employers to IRS, or for estimated tax payments that the taxpayer remitted to the IRS.
Taxpayers claiming a tax residence in one of the territories under MSRRA and seeking a refund should:
- Complete the appropriate Form 1040 and mark “MSRRA” in red ink on the top of the return.
- Attach the signed perjury statement described above, verifying their qualifications for relief under MSRRA.
- Mail the Form 1040 and attachments to the IRS Service Center indicated in the Form 1040 instructions.
FAQ 9: Can MSRRA relief be applied to Failure to Pay penalties?
Yes, if qualified civilian spouses request abatement of Failure to Pay penalties, these may be granted upon verification and provision of the signed perjury statement. However, interest cannot be adjusted under MSRRA.
Source: Internal Revenue Manual (IRM) 126.96.36.199.7 (10-01-2020)
Let’s consider a fictional military spouse, Jane, who moved from Texas to Guam in 2022 to accompany her spouse serving in the military. Jane continued to work remotely for a Texas-based company. As per the MSRRA, Jane can continue to maintain her tax residence in Texas and may be eligible for an extension on the time to pay her taxes.
When filing her 2022 taxes, she marks “MSRRA” in red ink at the top of the form. Jane includes a signed statement declaring her eligibility for MSRRA relief, stating she is in Guam solely to accompany her spouse, and her tax residence remains the same as her spouse’s in Texas.
Following the correct procedure helps Jane benefit from the tax reliefs provided under the MSRRA, demonstrating how the Act supports military spouses during their transition to different regions.
Please note: Always consult with a local tax professional or the IRS directly if you have questions or concerns about your specific tax situation.
Hope this blogpost provides a clear understanding of the Military Spouses Residency Relief Act. Keep following our blog for more informative posts on various tax laws and regulations.
***Disclaimer: This communication is not intended as tax advice, and no tax accountant -client relationship results**