Mil Spouse / AK Resident working in MD

[juliesbob]

Hi All,

I’m an Air Force spouse (former AF myself) living and working in MD (here on my wife’s orders). Up until April of last year, we had maintained our AK residency (AK has no state taxes), however, my wife switched to AF Reserve and we had to become MD residents. I have been working in MD since 2014, and my work never withdrew MD state taxes, as I had checked the box that I was a resident of another state and mil spouse. I’ve been filing taxes on my own every year online with no problems and claiming AK residency. TurboTax, nor the IRS, never had issues.

Fast forward to yesterday..my wife wanted us to try to get our taxes done professionally this time because of some of our life changes last year. I thought it was a good idea so we went to H&R Block. The gentleman we saw is saying that even though I was a resident of AK and pay no state taxes, that I owe state taxes to maryland for every year I worked here! I thought MSRRA covers me in this kind of situation. I’d greatly appreciate any all help! Thank you!

 

[locum7]

@juliesbob So you would be a part time resident of Maryland. Part year for Alaska Up until your spouse was discharged from active duty. From that forward you should be paying taxes to MD along with your spouse. Make sure you get with HR to change your state status. You should have started paying taxes to Maryland in April you may have to pay a underpayment penalty to MD.

 

[juliesbob]

@locum7 Thank you so much for responding!! So I forgot to mention that I did actually change my residency with my work, but through my own fault, forgot to do so until August. So I should just owe the underpayment penalty for that four month gap, and not need to pay back five years of state taxes like the gentleman at H&R Block was thinking. Do I have that right?

 

[locum7]

@juliesbob The penalty is usually determined by the amount that was under payed and not the length of time for individual taxes, business are a different story. Usually if you under payed by less than $100 then there may be no penalty. You would have do a Maryland return to determine under payment if any. I believe it is a 13% interest rate.

 

[juliesbob]

@locum7 Where should I direct the tax guy for proof that we don’t owe state tax prior to April if he asks?

 

[frenchgirl]

@juliesbob I would find a different tax preparer before trying to educate the one you have now. If he doesn't understand that tax law, then chances are that there are other things he doesn't understand.

 

[locum7]

@juliesbob Was your wife also claiming AK?

 

[juliesbob]

@locum7 Yep! We both were.

 

[locum7]

@juliesbob https://militarybenefits.info/military-spouse-act-residency-relief-msrra/

Here is a link to a summary. Did the preparer state why you can’t claim AK as your domicile for the time your spouse was on active duty? He may know something I am missing. I am not a certified preparer or accountant. I did work for HR block awhile back and was dual military for 4 years plus a military spouse for 27 years. Both my children are active duty and I just did their taxes with one buying his first home in Virginia this year. So while I am experienced I may be missing something.