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Military medicine tax question- declaring state for state income tax

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  • Military medicine tax question- declaring state for state income tax

    I am a professional student (think medical, dental, pharmacy, optometry, etc) doing HPSP so I am a commissioned officer that receives taxable income (as a stipend). I am originally from one state (aka my parents' house) and currently live in a different state for school, both of which have state income tax. My brother lives in a state that does not have state income tax. During basic, I'm pretty sure they said if we have some kind of tie to an income-free state, that we could change our address to it. Am I able to change my permanent address to my brother's residence? I obviously do not want to get in legal tax issues so am looking to better understand the tax landscape. Am I able to reach out to a JAG or some sort of finance department right now even though I'm not AD/part of any command?

    I think they mentioned if I 1. have family that lives in a tax-friendly state or 2. Have an "intent" on living there (despite not actually living there ever) then that would be alright. Does that sound right?

  • #2
    DFAS will have your home of record (where you lived on entry into the military) on your tax statements. That being said, your state of residence for tax purposes can be different/changed. However, many states have exemptions for military income so you may not need to switch. Where it gets more advantageous to switch is where your residence listed in DFAS taxes your dividends or whatever and you currently are in a low/no tax state. In that instance you need to speak to HR and submit proof of residence in the new state (often a driver’s license, voter registration, etc.).

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    • #3
      Originally posted by ENT Doc View Post
      DFAS will have your home of record (where you lived on entry into the military) on your tax statements. That being said, your state of residence for tax purposes can be different/changed. However, many states have exemptions for military income so you may not need to switch. Where it gets more advantageous to switch is where your residence listed in DFAS taxes your dividends or whatever and you currently are in a low/no tax state. In that instance you need to speak to HR and submit proof of residence in the new state (often a driver’s license, voter registration, etc.).
      Thanks for the response. Upon more research, I see that my home of record (MI) is tax-free for state income for military and that my current residence in OH does have taxes. However, when I was filing taxes this last April, on Turbotax it showed I owed more state tax when I put MI as my address than when I put OH as my address. I believe that HPSP stipend only takes out my federal each pay check, not state. This is contradictory to the state tax info I found online. Could this be bc I am IRR 90% of the year and only AD 45 days/year?

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      • #4
        OH exempts your military income. But only military income. Read the tax filing instructions for OH as it pertains to residency assessment and how military income is treated.

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