When talking with military families about taxes, residences and driver's licenses, one thing keeps coming up: the misuse of the term "home of record." It isn't a big thing in the greater scheme of life, but it certainly can make a simple conversation a lot more complicated if one person uses it correctly and one person uses it incorrectly.
It's often confused with "state of legal residence." While a service member may have the same home of record and state of legal residence, that doesn’t make them the same thing. Just like eyes and hair aren’t the same thing even if you have brown hair and brown eyes.
Home of Record
Military service members' home of record is the place from which they entered the military. It is not necessarily "where they're from." For example, if Jose is from Maryland but went to college in Florida and entered the military in Florida, then Jose's home of record is likely Florida. Homes of record don't change unless your information was entered incorrectly or you leave the military then rejoin. Homes of record are used for certain travel allowances, particularly when leaving military service. Military spouses do not have a home of record.
State of Legal Residence
A state of legal residence is the place the service member claims as their home. It's typically been thought of as the state where they intend to live after leaving the military, but, honestly, very few people actually know where they will end up after the military. Your state of legal residence may change throughout your life.
However, you can't just pick a place. Every state has its own rules and steps you need to take. In order to legally change your state of legal residence, you generally must meet all three of the following requirements:
- Be physically present in the new state
- Intend to treat that location as your permanent home
- Intend to abandon your old state of legal residence
Intent is one of the least understood and most difficult parts of determining legal residency or domicile. The cumulative effect of a number of small steps adds up to the whole.
Ways to show that you intend to make a state your legal residence include:
- Obtaining a driver's license
- Registering your vehicle
- Registering to vote
- Actually voting
- Paying state tax
- Reflecting that state in your will
- Any other actions that could be construed as showing intent to remain a resident of a state
Military members who take the steps to establish a new domicile can change their pay withholding by using DD Form 2058, State of Legal Residence Certificate. Just naming a state on the form does not make you a legal resident of that state; it just means you'll be having the correct state taxes withheld.
Determining Legal Residency
The Servicemembers Civil Relief Act allows military members to retain a state of legal residence or domicile even though military orders have caused them to move to another state. However, those military members must be careful not to take any action that might give the impression that they have actually changed their domicile to the new state.
I see and hear three things that military members do all the time that make the question of domicile tricky:
- Changing their driver's license
- Changing their vehicle registration
- Claiming a homestead exemption on a property
The last one is particularly important. In most cases, when you claim a homestead exemption on your house, you are declaring that you are a legal resident of that state. If you claim or accept the homestead exemption on a property in one state, but declare your domicile in another state, you may have problems at some point in the future.
In the past, a military spouse was required to change their domicile with each permanent change-of-station (PCS) move.
In 2009, the Military Spouse Residence Relief Act amended the SCRA, giving military spouses the right to retain their state of legal residence as long as it was the same state as their active-duty spouse and as long as the spouse was living with the active-duty member as the direct result of military orders. The law did not give anyone the right to establish residency without meeting the state’s rules, which generally include physical presence.
An update in 2018 allowed military spouses to “borrow” their active-duty service member’s state of legal residence for purposes of taxation. Then another update in 2023 added the right for military spouses to retain their own state of legal residence when they move, even if it is not the state of the service member.
Your state of legal residence is where you pay (or don’t pay) state taxes, vote, and usually where your children will receive in-state tuition for college. Being clear and consistent in your demonstration of your intent to be a legal resident of a single state can help you avoid frustration and sticky situations.
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