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Information for Current and Former Military Personnel and Families

COVID-19 Related Tax Information
COVID-19 Extension of Time to File and Pay
Information about the Federal Economic Impact Payment – Stimulus Check
Important Information About Retail COVID-19 Fees and Sales Tax

Income Tax Filing Requirements for Military Personnel


Your filing status and income determine whether you have to file a New Jersey Income Tax return. Even members of the Armed Forces must file if they meet the income filing requirements. New Jersey has two personal Income Tax returns for individuals. There are no part-year tax return forms. Part-year residents must use Form NJ-1040, and part-year nonresidents must use NJ-1040NR and indicate the portion of the year covered by each return.
Determining Residency
Domicile
To determine your residency, you must first know your domicile. Your domicile is the place you consider your permanent home. It's where you intend to return to and live after you are discharged or when you retire from the military. You have only one domicile, although you may have more than one place to live. Your domicile does not change until you move to a new location with the intent to establish your permanent home there and to abandon your old domicile.

Nonresident
For tax purposes, you are a nonresident of New Jersey if you temporarily work here with no intention of making it your home. So, if your home of record (domicile) was another state when you joined the military, you remain a resident of that state, even if you are stationed in New Jersey.

Resident
If your home of record (domicile) was New Jersey when you joined the military, you remain a resident for Income Tax purposes, unless you qualify for nonresident status (see below). Your domicile does not change when you are temporarily assigned to duty in another state or country.

Three Conditions for Nonresident Status. Military personnel who are domiciled in New Jersey, but who meet all three of the following conditions for the entire year, are considered nonresidents for Income Tax purposes:

  1. You did not maintain a permanent home in New Jersey; and
  2. You did maintain a permanent home outside New Jersey; and
  3. You did not spend more than 30 days in New Jersey during the tax year.
If you are stationed outside the New Jersey and you are living aboard ship, in barracks, billets, or bachelor officer quarters, you remain a New Jersey resident for Income Tax purposes. In this case, you are not considered to be maintaining a permanent home outside New Jersey.

However, if you pay for and maintain, either by out-of-pocket payments or forfeiture of quarters allowance, an apartment or a home outside New Jersey, you are considered to be maintaining a permanent home outside New Jersey.
Income Tax Withheld From Military Pay
If your home of record (and domicile) was New Jersey when you entered the military, you are considered a New Jersey resident, and New Jersey Income Tax will be withheld from your military pay. If you have changed your home of record (and domicile) from New Jersey to another state, or you satisfy the three conditions for nonresident status, your military pay is not subject to New Jersey Income Tax.

If you meet the three conditions for nonresident status, file Form DD-2058-1, State Income Tax Exemption Test Certificate, with your payroll or finance officer to stop New Jersey Income Tax from being withheld from your military pay. Form DD-2058-1 is a U.S. government form that is used as a basis for not withholding New Jersey Income Tax from military pay. Do not file this certificate with the New Jersey Division of Taxation.

Native American servicemen and women use Form DD-2058-2 to claim exemption from state income tax withholding on their service pay. This form requires the individual to provide the name of the tribe to which they belong as well as the name of the reservation or location in Indian Country claimed as the individual's primary residence.

If New Jersey Income Tax was withheld from your military pay in error, you must file a nonresident return (Form NJ-1040NR) to get a refund of the tax withheld. The income section of the New Jersey nonresident return has two columns: Column A, income from everywhere, and Column B, income from New Jersey sources. If you had no income from New Jersey sources other than your military pay, complete your nonresident return as follows:

  • Enter in Column A the amount of your income from everywhere (excluding your military pay).
  • Enter zeros on the wages line and gross income line in Column B for the amount of income from New Jersey sources.
  • Enter the amount of New Jersey Income Tax withheld on the appropriate line and complete the "overpayment" and "refund" lines.
  • Enclose a signed statement that lists the three conditions you satisfied for nonresident status and states how you met each of these conditions.
As a New Jersey resident, you are subject to tax on all your income, regardless of where it is earned, unless the income is specifically exempt from tax under New Jersey law. You must report your military pay (including combat pay) and cost-of-living allowance as taxable income on your resident return. Mustering-out payments, subsistence and housing allowances, and U.S. military pension and survivor’s benefit payments are exempt.

New Jersey Income Tax is withheld from military pay of New Jersey residents. If you have changed your home of record (and domicile) from New Jersey to another state, or you satisfy the three conditions for nonresident status, your military pay is not subject to New Jersey Income Tax.

Note:
Under the Military Spouses Residency Relief Act, a nonresident civilian spouse/civil union partner of a service member may be exempt from New Jersey Income Tax on earned income from services performed in New Jersey if they meet certain requirements. See information on filing requirements for nonmilitary spouses/civil union partners of military personnel.

As a nonresident, the military pay you receive while stationed here is not subject to New Jersey Income Tax. See Notice for NJ Nonresident Servicepersons Filing Form NJ-1040NR. Mustering-out payments, subsistence and housing allowances, and U.S. military pension and survivor's benefit payments also are exempt. If you had income from New Jersey sources (other than military pay) such as a civilian job in off-duty hours, income from a business, trade or profession carried on in this state, or income or gain from property located in New Jersey, that income is taxable.

In addition, a nonresident civilian spouse/civil union partner of a service member may be exempt from New Jersey Income Tax on earned income from services performed in New Jersey if they meet certain requirements. See information on filing requirements for nonmilitary spouses/civil union partners of military personnel.

More Information
For more information on military personnel, see Tax Topic Bulletin GIT-7, Military Personnel . For more information on filing status and New Jersey Income Tax, see Tax Topic Bulletin GIT-4, Filing Status


Last Updated: Wednesday, 04/08/20