FAQs - Military Spouses Residency Relief Act
The Military Spouses Residency Relief Act amends the Servicemember Civil Relief Act to include the same privileges to a military servicemember’s spouse. This Act allows a servicemember’s spouse to keep a tax domicile (legal residence) throughout the marriage, even if the spouse moves into California, so long as the spouse moves into California to be with a servicemember who is in the state because of military orders. This Act also amends among other tax administrative items, the elimination of the servicemember spouse’s burden of filing multiple part-year and nonresident income tax returns when they earn wages in California under the following conditions:
- The servicemember is in California on military orders; and
- Is legally married to the spouse; and
- The spouse is in California solely to live with the servicemember.
The effective date for the income tax exemption is for the tax year beginning on or after January 1, 2009.
- Does the servicemember spouse need to file a new Employee’s Withholding Allowance Certificate (DE 4) for the income tax exemption?
Yes, the DE 4 includes this exemption and is available online for employers and servicemember spouses.
- Does the employer or servicemember spouse need to provide proof to declare another tax domicile (legal residence) other than California?
The Employee’s Withholding Allowance Certificate (DE 4) provides a specific line and signature for the servicemember spouse to attest under penalty of perjury, that they are requesting an income tax exemption from the State of California. This statement will satisfy the proof requirement. However, the following records (not inclusive) may be requested from the employer or employee to verify the tax exemption if an audit is performed:
- Spouse’s military ID card
- Servicemember’s Leave and Earnings Statement (LES)
- Servicemember’s Form W-2
- Spouse’s driver license
- Spouse’s voting registration
- Department of Defense form Residence Certificate, State of Legal, DD 2058, declaration of servicemember’s “permanent state of residency”
- Marriage license
- Divorce decree
- As an employer, how do I report a servicemember spouse’s wages on the Quarterly Contribution Return and Report of Wages (DE 9) and the Quarterly Contribution Return and Report of Wages (Continuation) (DE 9C)?
The servicemember spouse’s wages are still subject to California Unemployment Insurance (UI) and State Disability Insurance (SDI) taxes as the spouse performed services in California. However, if the spouse elects to exempt wages that are subject to California Personal Income Tax (PIT) by filing the new Employee’s Withholding Allowance Certificate (DE 4) form, no PIT wages or withholding need to be reported by the employer.
When filling out the form:
- Enter “Total Subject Wages.”
- Enter zero for “PIT Wages.”
- Enter zero for “PIT Withheld.”
- Include the servicemember spouse’s subject wages in the “Total Subject Wages Paid this Quarter.”
- Include the servicemember spouse’s subject UI wages in the “UI Taxable Wages for the Quarter.”
- Include the servicemember spouse’s subject SDI wages in the “SDI Taxable Wages for the Quarter.”
- If I submitted California PIT withholdings to the EDD prior to the servicemember spouse filing an exemption, am I required to issue a refund?
An employer is obligated to make withholding based upon the Form W-4 or Employee’s Withholding Allowance Certificate (DE 4). If an employee changes his or her withholding form and elects the exemption, then the employer must comply with that election going forward. Therefore, an employer would not be required to refund any monies properly withheld under the previous Form W-4 or DE 4. The employee would have to claim the refund on their state tax return. Questions regarding your specific personal income tax return filings and PIT withholding refund requests should be directed to the Franchise Tax Board (FTB) at 1-800-852-5711.