Military Spouses Residency Relief Act

The Military Spouses Residency Relief Act allows the military spouse to declare the same state of legal residency as their spouse when they have relocated solely to be with the service member in compliance with the service members military orders.  In other words if the service member maintains legal residence in GA but has been give military orders to be stationed in MA and their spouse opts to join them in MA; the spouse is eligible be taxed based on the legal residence of GA.  The legal residence is where the spouse intends to return and remain once the service members orders change.  Most often this is where the spouse claimed legal residency before moving to be with the service member.  Additionally military spouses must fulfill their state’s residency requirements. That almost always includes having a physical presence in that state. The MSRRA only applies to state income tax, but other liabilities such as UI tax and any paid family leave or disability required by the work state will still apply.

Documentation

Employees must complete the applicable State Withholding Exemption form and provide their employer with the appropriate documentation to be eligible for the relief.

isolved Setup

• Enter the EE's legal resident address in isolved on the EE's Record:
  • Navigate to Employee Management / Employee Maintenance / General and update the address in the Employee Address fields.
• Update the EE's Reciprocity rule on the EE's Tax Information Screen:
  • Navigate to Employee Management / Employee Pay / Tax Information and update the Reciprocity Rule field to "Resident Only".  This will allow isolved to calculate WH for only the legal resident state.
• Enter an Override Address for the EE if applicable:
  • If the EE needs their local address to appear on the pay stub or W2, you can use the Override Address functionality to update the address just for the paychecks or end of year forms.  You can find details about the Override Address by logging into the isolved University and reviewing the Override Address article.