On November 11, 2009, the President signed into law the Military Spouses Residency Relief Act (Act). The Act amended the Servicemember Civil Relief Act (SCRA) to provide that a spouse shall neither lose nor acquire domicile or residence in a state when the spouse is present in the state solely to be with the servicemember in compliance with the servicemember’s military orders if the domicile is the same for both the servicemember and spouse.
The Act is effective for taxable year 2009 and thereafter. It does not affect taxes imposed or paid for 2008 and earlier.
How the Act Affects Income Tax:
A nonresident spouse of a nonresident servicemember may be exempt from Oklahoma income tax on income from services performed in Oklahoma if all of the following facts are true:
the servicemember is present in Oklahoma in compliance with military orders;
the spouse is in Oklahoma to be with the servicemember; and
the spouse maintains the same domicile as the servicemember.
Any refunds for taxable year 2009 may be claimed on or after January 1, 2010 by filing a Form 511NR ‘Oklahoma Nonresident/Part-Year Income Tax Return’.
How the Act Affects Withholding Tax:
A spouse whose wages are exempt from Oklahoma income tax under the SCRA may claim an exemption from Oklahoma withholding tax. Spouses wishing to claim this exemption from income tax may file a Form OW-9-MSE: Annual Withholding Tax Exemption Certification for Military Spouse with their employer. Spouses claiming exemption from Oklahoma income tax should consider the impact on their income tax (and estimated income tax) liability in their domicile state.
The Oklahoma Tax Commission has additional information and a section of Frequently Asked Questions on their website at www.ok.gov/tax.
Link: OW-9-MSE: Annual Withholding Tax Exemption Certification for Military Spouse
Link: Frequently Asked Questions Regarding the Military Spouses Residency Relief Act.