Effective for tax years beginning 2018 and after, the Veterans Benefits and Transition Act allows the same tax benefits permitted to military personnel under the Servicemembers Civil Relief Act (SCRA) to also apply to a military spouse's nonmilitary service income under certain circumstances. This new law expands those rights originally granted to military spouses beginning tax year 2009 under the Military Spouses Residency Relief Act (MSRRA), by now allowing military spouses to choose the same state of legal residence as their servicemember for tax purposes, regardless of whether the military spouse has ever lived in that state.
- the active duty servicemember is present in Kentucky in compliance with military orders; AND
- the military spouse is in Kentucky solely to be with the active duty servicemember; AND
- the active duty servicemember maintains legal residence in a state other than Kentucky and the military spouse chooses to claim that same state as his/her state of legal residence, too.
If all of these conditions apply, the military spouse may file a new Form K-4 with his or her employer to claim an exemption from withholding of Kentucky income tax.
If the servicemember's spouse qualifies for military spouse relief but his or her employer withholds income tax, he or she should file Form 740-NP Kentucky Individual Income Tax Nonresident or Part-Year Resident Return to request a refund of Kentucky income tax withheld. Please check the box labeled Military Spouse. Your income will not be reported as taxable on the Kentucky income tax return. A military spouse who meets all of the requirements for his/her income to not be taxable to Kentucky should file a new Form K-4 with his or her employer to claim the exemption from withholding of Kentucky income tax for future years.
Frequently Asked Questions
|For tax years 2009 to 2017, both the servicemember and his/her spouse had to be legal residents of the same state before moving to Kentucky in order for a military spouse to qualify for income tax relief. If they were not legal residents of the same state prior to being stationed in Kentucky, the military spouse would have been taxed as a Kentucky resident while living in Kentucky during those tax years. For tax years prior to 2009, military spouse income tax relief was not available.|