Treatment Of Military Personnel Guideline - Income Tax - North Dakota Offi Ce Of State Tax Commissioner Page 2
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6Military Personnel Guideline
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North Dakota resident, you remain a legal resident of North Dakota until you take affirmative action to give
up your legal residence in North Dakota and establish legal residence in another state. If you are not a legal
resident of North Dakota, you do not become a legal resident of North Dakota solely by reason of being
stationed in North Dakota.
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The Act provides that compensation received by military personnel for federal
Military Compensation.
active duty is taxable only by their state of legal residence. If you are a legal resident of North Dakota, any
compensation you receive for federal active duty is subject to North Dakota income tax regardless of where
you are stationed, including overseas. If you are a nonresident of North Dakota who is stationed in North
Dakota, you are not subject to North Dakota income tax on your compensation received for federal active
duty.
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The Act provides that a state may not
Income adjustment for certain nonresident military personnel.
use the compensation for federal active duty received by nonresident military personnel in the calculation
of the tax on other income sourced in the state if its inclusion would result in an increase in the state’s
income tax. Nonresident military personnel who use North Dakota Form ND-1 (Main Method) may
subtract their federal active duty compensation in calculating their North Dakota taxable income. (Note:
This provision of the Act does not affect the calculation of the tax on Form ND-2, the Optional Method.)
Determining residency status
Your legal residence (or domicile) status determines what fi ling requirements apply, what forms to use, what income
is taxable, and what deductions and tax credits are allowed to you.
Your legal residence in a state does not change unless you take affi rmative steps to change it. This applies regardless
of where you are stationed during the year. If you are married, you and your spouse generally are considered to have
the same state of legal residence. However, if you and your spouse had different states of legal residence when you
married, you will maintain your separate states of legal residence until either of you takes affi rmative steps to change
your residency.
Note: If you took the necessary steps to change your legal residence, be sure to let your military payroll offi ce
know of the change so that your payroll records are changed to refl ect the correct state of residence for withholding
purposes. However, be advised that simply making a change to your military payroll records does not in itself mean
that you have met the requirements to change your legal residence.
Legal residence.
Legal residence (which is also called domicile) is the place that is your permanent or indefi nite home to which
you always intend to return whenever absent from it. If you have more than one home, only one of them may be
your legal residence. Legal residence is based on your intent as supported by your actions. Legal residence, once
established, does not change until affi rmative steps are taken to change it.
If there is uncertainty as to a person’s state of legal residence, the following factors are looked at to make the
determination:
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Property and residence information
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Location of home, whether an apartment, house, condo, etc.
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Mailing address
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Amount of time spent in state
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Employment and financial information
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Location of bank accounts
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