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Last Updated: 12/29/2016

Military Spouses Residency Relief Act

The federal Military Spouses Residency Relief Act (MSRRA) lets spouses remain legal residents of their home state if they temporarily move to another state to be with their active-duty military spouse. During this time, the spouse’s work-related income generally cannot be taxed in the state where the income is earned.

What if I’m stationed outside Minnesota and my spouse is living with me in that state?

If you and your spouse are both Minnesota residents and living in another state:

  • Your spouse’s work-related income is exempt from the other state’s income tax under MSRRA.
  • You and your spouse must file a Minnesota tax return if you have to file a federal return. You must use the same filing status on your Minnesota return – joint or separate – as on your federal return
  • All of your income and your spouse’s income is subject to Minnesota tax, but you can subtract any federally taxable active-duty military pay from your Minnesota income using Schedule M1M, Income Additions and Subtractions.
  • Your spouse should ask that either state income tax withholding not be withheld from their wages or Minnesota tax be withheld from their wages
  • You and your spouse may have to make “estimated tax” payments to Minnesota if no withholding is being paid to Minnesota or you expect to owe more than $500 after subtracting your Minnesota withholding and refundable credits. See “Estimated Tax” for details.

If you and your spouse are not residents of the same state, your spouse should contact the tax department of the state you are stationed in to find out if their work-related income is exempt from that state’s tax.

What if I’m stationed in Minnesota and my spouse is living with me but we’re not residents?

If you’re on active military duty and stationed in Minnesota, your military wages are exempt from Minnesota tax.  Your spouse’s work related income is exempt from Minnesota’s income tax if the following requirements are met:

  • You’re in Minnesota because of your military orders.
  • Your spouse is in Minnesota to be with you and didn’t move here for any other reason.
  • You and your spouse are both legal residents of the same state (but not Minnesota).

If you (or your spouse if you’re filing a joint return) have Minnesota income other than from your military pay, or your spouse has Minnesota income other than wages, you may be required to file a Minnesota income tax return.  Examples of income that’s taxable to Minnesota:

  • Non-military wages you earn working in Minnesota,
  • Gambling winnings from a casino located in Minnesota,
  • Capital gains from the sale of real property in Minnesota

See How Nonresident Income is taxed by Minnesota for more examples of income that is taxable to Minnesota.  Neither your military wages nor your spouse’s wages (if the above requirements are met) are taxable to Minnesota.

If your (and your spouse’s if filing a joint return) income taxable to Minnesota is more than the minimum filing requirement amount ($10,350 for 2016) you must file a Minnesota income tax return.

If your income taxable to Minnesota is less than the minimum filing requirement:

  • Your spouse should give their employer a properly completed Form W-4MN to prevent or stop Minnesota income tax from being withheld from their wages.
  • To get a refund of Minnesota income tax withheld from your spouse’s wages during 2016, you must file Form M1, Individual Income Tax and Schedule M1NR. Don’t include your military wages or your spouse’s wages in Column B of Schedule M1NR. Use the same filing status – joint or separate – as on your federal return.