Tax exemption for active duty military personal

[Hutch]

I might be late the party, but I remembered some rumors about Arkansas possibly passing a bill for State Income Tax exemption for military personal. So after a little research I found this.

http://www.arkleg.state.ar.us/assembly/2013/2013R/Bills/SB463.pdf

Looks like it will start in 2014. What are your thoughts? Am I the only one that didnt know this?

[Flying Razorback]

I'm ok with it, I'm an Oklahoma resident because of the state tax exemption there.  It was a pretty big chunk of money I was paying back here every year and I finally bit the bullet and switched.

Most guys I know hold Texas, Florida, Oklahoma, California, and a few other state residencies solely because of the military tax exclusions or lack of state income tax.  It would be good for the state to have some of us keep our residencies.

It still hasn't passed though, right?

[Ragnar Hogbrok]

Never heard of it, but I'll welcome it.  I've paid Arkansas taxes for the last 11 years even though I haven't lived there in that time.  I could have changed my state citizenship and not paid any state tax, but I figured my state could use my tax money.

Here's the bill's status.  Apparently it's now an "Act."  I'm assuming this means it's passed the governor's desk?

http://www.arkleg.state.ar.us/assembly/2013/2013R/Pages/BillInformation.aspx?measureno=SB463

[Hutch]

They way I understand it is that an Act is legislation, so it has already cleared the Governor's desk.

[WHITEPW]

I always refused to be a TX resident couldn't do it.  I hope this is law.

[Flying Razorback]

I always refused to be a TX resident couldn't do it.  I hope this is law.

I refused when I was stationed in Florida and then my first few years in Oklahoma.  But as I got older I just couldn't stand watching that many thousands of dollars go a year and not come back.  I figured Oklahoma wasn't as bad as a Texas but would love to get my residency back here.

[LSUFan]

Anybody who has ever been active, should never have to pay any taxes, and retire after assignment with 100% pension and health insurance.

The rules should be flip flopped for active duty servicemen and congress/president.

[Chief Mac]

Anybody who has ever been active, should never have to pay any taxes, and retire after assignment with 100% pension and health insurance.

The rules should be flip flopped for active duty servicemen and congress/president.

agreed.....all service members give/gave more than any politician ever has to the country and should reap the benefits that our policy makers currently have

[LSUFan]

agreed.....all service members give/gave more than any politician ever has to the country and should reap the benefits that our policy makers currently have

A Freaking Men!

[Sueie]

I refused when I was stationed in Florida and then my first few years in Oklahoma.  But as I got older I just couldn't stand watching that many thousands of dollars go a year and not come back.  I figured Oklahoma wasn't as bad as a Texas but would love to get my residency back here.

WHY would the money not come back? Did you not file Arkansas state tax at the end of the year?  I usually got a refund while I was on active duty.

[Sueie]

Never heard of it, but I'll welcome it.  I've paid Arkansas taxes for the last 11 years even though I haven't lived there in that time.  I could have changed my state citizenship and not paid any state tax, but I figured my state could use my tax money.

Here's the bill's status.  Apparently it's now an "Act."  I'm assuming this means it's passed the governor's desk?

http://www.arkleg.state.ar.us/assembly/2013/2013R/Pages/BillInformation.aspx?measureno=SB463

What about Retired military?

[Flying Razorback]

WHY would the money not come back? Did you not file Arkansas state tax at the end of the year?  I usually got a refund while I was on active duty.

I do not file in Arkansas, I file in Oklahoma because they have a military income tax exemption.  California, Ohio, and a couple other states also have this. 

When I filed in Arkansas, yes, I received a $200 refund or something like that, some years it was like $86.  But they still kept the other $3000 or so that I had paid in.  I want all that money back, not just a couple hundred bucks of it.  Arkansas only exempts the first $9000 of military pay.  My taxable salary is only about 65% of my pay but that's still about $67,000 of taxable salary a year.  So exempting $9,000 of it left me with $58,000 of taxable salary.

[Hutch]

What about Retired military?

From the discussion I read about Retired Military benefits, it will remain as taxable income. There was a proposal to add it to the standing provision so $9000 could be deducted, but from what I read it did not go anywhere.  So..... Start working on that so when I'm eligible to retire it will be passed.

[Sueie]

From the discussion I read about Retired Military benefits, it will remain as taxable income. There was a proposal to add it to the standing provision so $9000 could be deducted, but from what I read it did not go anywhere.  So..... Start working on that so when I'm eligible to retire it will be passed.

If you are serving under the Stupid SOB that is your Commander in Chief now.  You deserve ANY benefits that you can get. 

Good luck getting them though. 

[Ragnar Hogbrok]

So, in perusing the Arkansas Department of Finance and Administration for any news on this subject, I find the latest press release available is from 2009, unless you're looking for 2013's inclement weather policy.

I've emailed my local Arkansas state rep, with no reply.  Screw it, I'm emailing Gov. Beebe to figure out if this is indeed law and what I need to do in order to take advantage.  I'll also be speaking to my S-1 so they can get a heads-up on not withholding state taxes come January.

Anyone else have any news?

[Ragnar Hogbrok]

WHY would the money not come back? Did you not file Arkansas state tax at the end of the year?  I usually got a refund while I was on active duty.

Remember, receiving a refund simply means you paid more taxes than you should have, not that you got money for nothing.  Unless your refund equals the total amount of taxes you paid, you still paid taxes to the state of Arkansas.

[Flying Razorback]

So, in perusing the Arkansas Department of Finance and Administration for any news on this subject, I find the latest press release available is from 2009, unless you're looking for 2013's inclement weather policy.

I've emailed my local Arkansas state rep, with no reply.  Screw it, I'm emailing Gov. Beebe to figure out if this is indeed law and what I need to do in order to take advantage.  I'll also be speaking to my S-1 so they can get a heads-up on not withholding state taxes come January.

Anyone else have any news?

I haven't heard either.  I'd really like to change my residency from Oklahoma back to Arkansas on the first of the year so that I can avoid having to file in two states for next year.

Did you just email your district rep's?

[Ragnar Hogbrok]

Just called the Department of Finance and Administration.  The individual I spoke with was ignorant of the topic and requested I fax the info to him so he could research it.  Imagine that, the bureaucracy responsible for collecting our state income taxes doesn't know imminent changes to the current tax law that take effect on 1 January.

I'll let you know what the individual replies with.

[Flying Razorback]

Wow, of course.  I've often wondered what the consequences would be if you and I were allowed to be incompetent with our aircraft as others in the government and military are allowed to be.

Thanks for looking in to it, I've been swamped getting ready to head out east for a military paid vacation to the sand and had almost forgot about this.

[Ragnar Hogbrok]

Still no answer from the Department of Finance and Administration.

[Ragnar Hogbrok]

Ok, finally received an email from the guy (after sending another email this morning, how professional):

Yes sir I did received your previous emails. I apologize for the delayed response.

The Active Duty Military State Income Tax Exemption form is being created and will be available soon.  Thank You.







Terrill Gilliam

DFA Service Rep

Witthholding Tax

AR Department Finance and Adminstration

Ph 501-683-6289

Fax 501-683-1036

I suggest all active duty, reserve, and guard members call this number and ask about it.  Maybe we can get a press release from the DFA explaining, in non-legal jargon, what our responsibilities are in order to take advantage of this most generous legislation.

[Ragnar Hogbrok]

Another tidbit of info I gleaned from the DFAS (Defense Finance and Accounting Service) representative when I called:  in order to take advantage of the exemption to state income tax, you simply log on to DFAS, click on "State Taxes," and click the "File Exempt" button.

Seems too easy, but apparently that's all there is to it.

[Ragnar Hogbrok]

Another email received today:

Your welcome Sir, check the DFA website at the being of the year. The form number is AR4MEC. Thank You.

[hogginbama]

Nate, after selecting "file exempt" on the DFAS website, I take it we are still required to apply with the State of Arkansas?

[Ragnar Hogbrok]

Nate, after selecting "file exempt" on the DFAS website, I take it we are still required to apply with the State of Arkansas?

I'm assuming that we will simply have to fill out the form and send it in with a copy of our W-2.  I don't think that DFA is exactly sure how they're going to tackle it just yet.  Once the form is finalized supposedly at the beginning of the year, I'm sure it will have some information and instructions on there. 

[Ragnar Hogbrok]

I'm assuming that we will simply have to fill out the form and send it in with a copy of our W-2 when it comes to tax time..  I don't think that DFA is exactly sure how they're going to tackle it just yet.  Once the form is finalized supposedly at the beginning of the year, I'm sure it will have some information and instructions on there. 

[UKhog1]

The state of Arkansas passed legislation, effective January 1, 2014, exempting active military pay from state income tax for legal residents of the state of Arkansas.

To claim exempt on myPay, go to the State Withholding screen and click on 'exempt' on the myPay SITW screen. To ensure that all of your 2014 pay is covered by the exemption, use myPay to claim exempt after December 19, 2013 but before January 7, 2014.

If you don't have access to myPay, you can claim exempt by completing Form AR4MEC, "Military Employee's Withholding Exemption Certificate."  Since this is a new form, if that form is not yet available on the Arkansas website, you can use the AR4ECSP, "Employee's Special Withholding Exemption Certificate," annotating 'exempt for active duty military pay' and 'effective 1/1/2014' on the form.  Ensure you complete and submit the form to your finance office in enough time for the form to be processed before January 7, 2014 in order to be effective for your mid-month January 2014 pay.

If you claim exempt after the dates indicated above, any state income tax that was withheld for 2014 will need to be obtained through a refund when you file your 2014 state tax return.  The pay system cannot process state tax changes retroactively and so cannot refund state taxes.

Arkansas withholding forms are available at:
http://www.dfa.arkansas.gov/offices/incomeTax/withholding/Pages/withholdingForms.aspx

Please see your finance office if you have any questions.



Bruce Keith
Director, Military Pay
Enterprise Solutions and Standards

[hogginbama]

Thanks UKHog, just got that same email from DFAS.

[Ragnar Hogbrok]

Good deal.  Maybe I was too proactive in trying to get information.  I could use more patience, I guess.

[UKhog1]

No worries. I've been asking the same questions and this Morning I had the email so I figured I would post it in case someone else was wondering and didn't get the email. I took it to mean we wouldn't have to fill out the form just the my pay. Two clicks and I'm exempt for next year woo hoo.

[hogginbama]

I clicked the "exempt" button back around the 14th. LES for the end of month that is now available shows no state taxes held out for the month of December.

[Flying Razorback]

I've really got to sit down this week and determine e how much my total tax burden would increase by moving my residency back to Arkansas.  I'm currently Oklahoma which is zero income tax for active duty.  I would rather be Arkansas.  However, if I switch back to Arkansas I'm pretty sure I will have to pay personal property tax on my cars and boat and my wife's Arkansas state taxes will no longer be exempt.  Is that right?  Currently she receives her state taxes back due to the miktary spouse exemption because she is only here due to us being stationed here.

[Tejas_Pete]

I switched to Texas residency in 2006 never had to worry about it. Texas is the shiznizit.

[Flying Razorback]

I switched to Texas residency in 2006 never had to worry about it. Texas is the shiznizit.

Do you still live there?  My problem is starting to become my lack of ties to OK.  I've registered my vehicles and have AR tags here and have had to get new drivers license in my time here.  It's becoming an uncomfortable question in my mind as to how I can claim OK residency.

[Tejas_Pete]

Do you still live there?  My problem is starting to become my lack of ties to OK.  I've registered my vehicles and have AR tags here and have had to get new drivers license in my time here.  It's becoming an uncomfortable question in my mind as to how I can claim OK residency.

Yes I've been stationed in Texas 7 of my 10 years in the service. Own a house here too so it made sense to switch to Texas residency.

[Kyle]

Thanks for posting this info gents. I'll be taking care of this on alert tomorrow.

[SA Hog Fan]

Yes I've been stationed in Texas 7 of my 10 years in the service. Own a house here too so it made sense to switch to Texas residency.

I have not lived in Texas since 2010 but still claim as my permanent domicile. I do not own a house there anymore. Register my cars through the mail, even renewed my drivers license through the mail. Buying a new car in North Carolina and registering it in Texas was kind of a pain but no really a problem. The only issue I have is that every year whatever state we live in withholds state income taxes from my wife. We get it back every year but it sucks to get my money back with no interest. I have talked to my accountant and was told that it is just easier to take a refund for her than to fight it. 

[Ragnar Hogbrok]

Bump for those who haven't seen, read, and taken advantage of this new legislation.

[Pork Twain]

I became a Texass resident long ago for this very reason.