BOLLING AFB, D.C. -- On Nov. 11, President Obama signed the Military Spouses Residency Relief Act. The law amends the Service Members' Civil Relief Act to provide that a spouse may keep their legal residence in their home state, as long as it is the same legal residence of the military member. Congress has not issued any specific guidance on how MSRRA is going to operate.

MSRRA does not create the right to pick and choose any state of legal residence for spouses of service members. The spouse may now align his or her residence with the service member, if the spouse previously had established residency in the same state as the service member. The alternative to aligning with the service member's state of residence is for the spouse to become a resident of the state where the service member is currently stationed.

For example, if an Airman was married and has an established Texas residence, the spouse, if also previously from Texas, would be able to reclaim Texas residence and apply it in 2009 to income earned in the state where the service member currently is stationed. In order for the spouse to reclaim Texas residence, the spouse would need to take the necessary steps to reestablish residency. On the other hand, if the spouse had no connections at all to Texas, he or she does not now have the ability to claim legal Texas residence. In this same scenario, if the military member is a resident of Texas and married a New Yorker with no ties to the state of Texas, the non-military spouse cannot now reacquire New York residence.

States are still figuring out the implications of MSRRA on their income tax and personal property tax systems. Spouses must be careful to take the appropriate steps when changing residence, and to not claim residence in a state where they lack the necessary contacts and intent to return. State tax authorities will closely scrutinize claims of changed residence for spouses and military members. If residency is inappropriately claimed, it may be viewed as fraudulent by the state tax authorities, which could potentially subject the military family to additional taxes and penalties.