Tax Question

Hey all, I have a quick question about taxes. First, a little background on the situation.

I was born and raised in MD. Got a MD drivers licsense when I was 16. Joined the Navy and went to bootcamp at 18. i went to a couple of training schools up in Illinois and briefly changed my residency with the military pay people to IL so I could stop paying MD income tax. 6 months later I transfer to VA and I change my residency back to MD. I had a jeep that I bought in MD and had MD plates. Fast forward a few years, I sell the jeep and buy a new one, this time with VA plates. A few months later, I turn 21 and renew my drivers license up in MD. Fast forward 3 years, I am out of the Navy, living back in MD.

Ok, basically, for the past 5 or so years, I have been paying MD income tax. Actually, make that the last 9 years since I was only an IL resident for a few months. I use to get a little money back, but the last 3 years (including this one) I have owed. Last year it was ~$700 and this year its ~$600 something.

Ok, now for my question, What makes someone a resident of a state? I didn't reside in MD for all these years, I lived in VA. My car has had VA tags for the last 4 years. I doing my taxes on turbotax and if I choose that I was a part time resident, I will get most of my taxes back. I was paying MD income tax, but does that make me a resident? Any tax experts here have any advice? Or anyone run into a similiar situation?

Thanks.

I'd say you were a part-time resident, but you need to check with a tax CPA. Some states exempt military from income taxes during their service, unless they are stationed in the state. The three main tests for residency are: driver's license, voting, and actual location.

Maryland does not exempt the military. I called the Maryland comptroller and talked to them about that.

everyone should be getting to work so bumpty bump bump. I only got 3 weeks!

It sounds like you are over-thinking things a bit. I am a CPA, and would be more than happy to try and help. As a disclaimer, my job does not involve doing taxes, but I help a lot of friends with theirs and I had to pass that part of the exam. I am also from Maryland (though I took the Exam in VA and live in LA). I have a few questions, but feel free to PM me if you would prefer.

Are you still an active member of the military?

Being a resident of Maryland is fairly simple. Did you live in the state of Maryland during the year? Did you live in another state for part of the year?

Also, where your car is registered does not impact your residency status. More likely the opposite should be true. I think that the vehicle should be registered where it is garaged. And aren't you paying personal property taxes while it is registered in VA?

Note that vehicle registration fees and all taxes (including Personal Property Taxes "the car tax in VA") are deductible on your returns. This is only going to impact you if you are itemizing.

Here is the residency language from the MD Tax instructions:

WHO IS A RESIDENT?
You are a resident of Maryland if:
a. your permanent home is or was in Maryland
(the law refers to this as your domicile).
OR
b. your permanent home is outside of Maryland,
but you maintained a place of abode (that is, a
place to live) in Maryland for more than six
months of the tax year. If this applies to you
and you were physically present in the state for
183 days or more, you must file a full-year resident
return.

PART-YEAR RESIDENTS
If you began or ended residence in Maryland
during the tax year you must file a
Maryland resident income tax return. See
Instruction 26.

MILITARY AND OTHERS WORKING
OUTSIDE OF MARYLAND
Military and other individuals whose
domicile is in Maryland, but who are
stationed or work outside of Maryland, including
overseas, retain their Maryland legal residence.
Such persons do not lose Maryland
residence just because of duty assignments
outside of the State; see Administrative
Release 37. Military personnel and their spouses
should see Instruction 29.

Thanks Duck. I separated from Active Duty in Sept 2008. That military clause is ridiculously written in my opinion, just like a lot of things that come from the MD State government.

Military and other individuals whose
domicile is in Maryland, but who are
stationed or work outside of Maryland, including
overseas, retain their Maryland legal residence.

I guess I can say my domicile was MD before I left. I certainly did not live in MD for all these years. I think I am going to file as a part time resident. I called the Comptroller's tax hotline about it and go no where. They must hire random people off the street to work those call centers. If MD wants to ***** about me filing as a part time resident, bring it on you greedy liberal government!

No problem. Just so you know (as I have moved a few times and have some experience), if you file as a partial year resident, they will often send a letter requesting a copy of the filing you made with the other state for the remainder of the year as proof that you have accounted for the whole year. This is even more likely to be triggered if your income from your state return is equal to your income from your federal return (which is information that also appears on your W-2), or if you filed with the state of MD for both 2007 and 2008.

I'm not telling you to do one thing or the other, just letting you know what you might have to be heads up about. It may be worth seeing a pro if you want to understand all of your options.

oh ok good point. Damn these greedy bastards! I never paid taxes to anyone but MD. I am kicking myself for not just becoming a fricking VA resident when I actually lived down there.

There is always the option of going to someone like HR block and having them re-do your taxes from last year as well and the year before as well. You might be able to get some of that money back if you were not a resident.