Nonresident Military Service Members and Spouses
A recent federal law provides an exemption from state income tax for any servicemember's spouse, who is present in a state solely due to the orders of the servicemember, and is not a resident of that state. Also, under Ohio law, the military income of nonresident servicemembers stationed in Ohio is not subject to income tax. These issues are explained below:
Military Nonresident Spouses
An amendment to the Servicemembers Civil Relief Act, effective Nov. 11, 2009 for tax years beginning Jan. 1, 2009 and later, extends the principle of domicile applied to servicemembers to the spouses of servicemembers. The amendment states that the spouse of a servicemember, who is domiciled in the same tax jurisdiction as his/her military spouse and is residing in a tax jurisdiction solely due to the military orders of his/her spouse, is excluded from taxation by that jurisdiction on income earned for services performed or from sources within the jurisdiction. However, the servicemember and spouse may be liable for income tax in their state of residency.
If you are a nonresident military spouse residing in Ohio who had Ohio income tax withheld and who claims exemption from Ohio income tax under the 2009 amendment to the Servicemembers Civil Relief Act, you should file an Ohio income tax return and claim a refund. The Department of Taxation may request proof of your eligibility for the exemption in subsequent correspondence.
To avoid a tax assessment based on a filing address on a federal return, military nonresident spouses are strongly encouraged to complete and file an IT 10 form annually when they file their federal return. Military spouses may also file an exemption from withholding IT MIL-SP form with their Ohio employers. Please be advised that this form asks spouses to provide a copy of their military ID card as verification of status; this is specifically authorized by the Department of Defense.
Please note, however, that Ohio-domiciled spouses of service members who reside with their spouses outside Ohio are presumed to retain their Ohio domicile. These spouses remain subject to Ohio state income tax and school district income tax, if their domicile is within a taxing school district.
Military Nonresident Service Members
If your state of legal residence as shown in your military personnel record is not Ohio, you are a military nonresident and are not subject to Ohio income tax or school district income tax on your military pay, but are subject to tax on non-military income earned in Ohio. Military nonresidents are strongly encouraged to complete and file an IT 10 form annually when they file their federal return to avoid an Ohio tax assessment.
Therefore, if you are a military nonresident stationed in Ohio, you may not have to file an Ohio income tax return if you have no Ohio income other than your military compensation.
However, you will have to file an Ohio income tax return if any of the following applies to you: (a) you earned compensation in Ohio other than as a service member; or (b) you had income from other Ohio sources such as (i) rental income from Ohio property, (ii) capital gains from the sale of Ohio property, (iii) Ohio Lottery Commission prizes and awards, or (iv) income from a pass-through entity doing business in Ohio.
Congress passed the Service Members Civil Relief Act in December 2003. It forbids any state from using military pay to calculate the household tax bracket of a nonresident service member or spouse. This act is discussed in more detail in Information Release IT 2008-02. This release also applies to the current taxable year.
The military automatically withholds state taxes for the state of legal residence, e.g., the home of record from where the servicemember entered the military, that is noted in his/her military personnel record. This does not change unless a servicemember takes action to change it, and this change is approved by the military. Service members can only make such a change by submitting Department of Defense form DD-2058; the approved form will be placed in his/her military personnel record.
For additional general information, see "Income Taxes and the Military" on page 13 of the 2016 Ohio income tax instructions. (Note: page 22 of the instructions for Ohio Schedule A line 25 apply to military nonresidents.)
You can locate any necessary forms and instructions on our Web site by visiting Tax Forms.
What to Do If You Receive a Billing Notice
If you are a nonresident service member whose only income during the taxable year was military pay, and you receive a billing notice for that year, please return the notice with the following information:
- a completed IT 10 showing that you — or if filing jointly, you and your non-military, non-resident spouse — are not liable for Ohio taxes for the taxable year; and
- a copy of your leave and earnings statements for January and December of the taxable year.
Additional details concerning military tax issues are discussed in our Frequently Asked Questions - Military.
You can reach us by e-mail at Military-Info@tax.state.oh.us. Our toll-free number for individual taxpayer inquiries is (800) 282-1780, and the toll-free number for forms is (800) 282-1782.