There's no place like home, but when a member of the military is asked "What is your home of record (HOR)?" sometimes the answer isn't as simple as you might expect. In fact, determining "home of record" can be quite confusing. Easily mistaken for the term "state of legal residence (SLR)," there are important differences for members of the military to understand so they can determine which term is most relevant for their current situation.
It's important to note that these two terms should not be used interchangeably. HOR is defined as the state where you first enlisted or from where you received a commission from one of the branches of armed services. HOR determines certain benefits, such as travel allowance back to your state when you leave the military.
SLR is considered your permanent home, the state where you intend to live after you leave the military. This state is considered your residency for state income tax purposes. In addition, state of legal record is used to determine qualification for in-state tuition rates, eligibility to vote for federal and state elections and for a will to be probated.
But neither is automatically changed when you're assigned to a duty station in a different state. There are differences to note when making the change for each.
Changing Home of Record or State of Legal Residence There are important points to keep in mind before you change your HOR or SLR. For example, you may change your HOR only to correct an error, or after a break in military service.
On the other hand, SLR may be changed with your approval at any time during your military career. To change the state of legal residence, you should submit paperwork (DD Form 2058 or State of Legal Residence certificate) to your finance officer. Once submitted and approved, SLR status can be changed, but may need validation or proof such as a written letter stating your position, a driver's license, voter registration or a vehicle registration for a new state. Varying State Rules on Military Pay Military pay is taxable in your state of legal residence, while other pay, such as income from a second job, is taxable in the state where you are working. Only your state of legal residence may tax your military pay, thanks to the Servicemembers Civil Relief Act, which prevents a state from taxing military pay just because a servicemember lives within the borders of that state. However, any non-military pay earned in the state you're stationed in is subject to income tax requirement in the state where it was earned.
Additionally, SLR rules are different for your spouse if you both live in two different states. Unless he or she is also an active-duty member of the military, your spouse is usually considered a resident of the state where you are stationed for state income tax purposes. Meaning, if you're married to a nonmilitary spouse and you file a joint return, it may become a bit complex. Check with your tax preparer to determine the state laws and what the specific rules are for that state.
Understanding how the military defines both of these terms and how the various tax implications of each may impact you can help you avoid confusion the next time you file an annual tax return. For additional information on these and other tax matters, please contact your local Jackson Hewitt office. To locate the nearest office, log on to www.jacksonhewitt.com and click on the office locator feature or call 1-800-234-1040.