On April 15, the IRS issued Notice 2010-30, which gives certain civilian spouses of service members on active duty an extension of time through Oct. 15, 2010, to pay their 2009 federal income taxes. However, civilian spouses were not granted an automatic extension of time to file a return.
The extension applies to civilian spouses of service members who were away from their tax residence during 2009 to be with their service-member spouse serving on military duty in American Samoa, Guam, the Northern Mariana Islands, Puerto Rico or the U.S. Virgin Islands and who maintained their tax residence in a state or in D.C. under the terms of the Military Spouses Residency Relief Act (PL 111-97), which was enacted Nov. 11, 2009.
To be eligible, the civilian spouse must have worked in a U.S. territory and claimed tax residence in a state or D.C.; however, federal employees working in American Samoa, Guam or the U.S. Virgin Islands are not eligible for the extension and neither are individuals working in Guam or the Northern Mariana Islands to whom IRC § 935 applies (under which taxpayers may treat amounts withheld and paid to the relevant U.S. territory as being paid to the IRS).
The notice provides procedures for eligible taxpayers to follow. These include marking “MSRRA” in red ink at the top of the tax return and attaching a signed and dated declaration, using wording specified in the notice.
Under the Military Spouses Residency Relief Act, the fact that a military spouse is present in or absent from a jurisdiction in the United States will not affect that spouse’s residence or domicile for tax purposes, as long as that presence in (or absence from) the jurisdiction is due to the service member’s compliance with military orders. In addition, any income the military spouse earns in a jurisdiction will not be treated as income from services performed or sources within that jurisdiction if that spouse is not treated as a resident of the jurisdiction under the act.
According to the notice, certain taxpayers who worked in a state or D.C. in 2009 and who claimed residence in a U.S. territory in 2009 under the act can apply for a refund of federal taxes that were withheld by the taxpayer’s employer or for estimated tax payments. The notice outlines the procedures civilian spouses should use to submit a refund claim under these circumstances.