Military spouses know how to do many things. Many hard things actually. We run households, pay bills, are excellent at organizing and being an uber for our kids. And there is another thing military spouses are learning more and more about: being their own boss. Whether it is a small business being run out of a rented location or from the home office as life chaos swirls around, military spouses are finding flexibility and longevity in making a career they choose.
During tax season, a military spouse with a career may have concerns about filing the proper way to make sure their income does not affect income received by the active duty personnel. Kristen Morgan, a tax professional, gives yet some more vital information to help spouses succeed filing their taxes.
Miltary Spouse Residency Relief Act (MSRRA). Like many things in the military culture, there a lot of unknowns about this bill because it has just recently been available. Of course, as I have said before, ensuring you have useful information so proper decisions can be made for the best tax file. Here are a few quick facts about the MSRRA.
MSRRA provides protection to military spouses related to residency, voting, and taxes. When a servicemember leaves his or her home state in accord with military orders, the servicemember’s spouse may retain residency in his or her home state for voting and tax purposes, after relocating from that state to accompany the servicemember. The MSRRA amends the Servicemember Civil Relief Act to include the same privileges to a military servicemember’s spouse.
Is legally married to the spouse; AND
The servicemember is in the state on military orders; AND
Currently resides in a state different than the state of his or her domicile; AND
Resides in the state solely to live with the servicemember; AND
The servicemember is present in the state in compliance with military orders. A military spouse does not lose his or her status if a servicemember is deployed to a war zone or other location where the military spouse is not allowed to follow. The military treats this as a “travel” or “TDY” situation.
The military spouse and the servicemember both are able to claim the same domicile (applicable in some states).
Schedule C. As discussed, military spouses may be building a business. If so, a Schedule C may be needed. With this schedule, filed together with your 1040 tax form, a business owner reports how much money was made or lost in the business during the year. Understanding how to file a schedule C is essential and attending a SCORE workshop could be helpful in knowing what deductions to capitalize on. SCORE is a small business resource and connection to the Small Business Administration and can assist with up to date information and guidance.
Again this is where a tax professional can also be beneficial. Kelly Erb, editorial lead for Bankable by Forbes, is also an excellent source of information.
Lastly, doing the research upfront when starting a business helps in the long run. Honestly, filing taxes and staying up to date with all tax laws and changes is very important. Remember you only have a few months to file, but you have the majority of the year to prepare for them.
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