As a military servicemember or military spouse connected to South Carolina, which state taxes my income — and can we choose?

Plain-English summary

Federal law protects military families from being taxed by a state just because military orders moved them there. Revenue Ruling #24-5 updates South Carolina's guidance to reflect the Veterans Auto and Education Improvement Act (VAEIA), enacted January 5, 2023, which amended the Servicemembers Civil Relief Act (SCRA). It applies to tax years beginning on or after January 1, 2023 and supersedes RR #21-10 for those years. It covers income tax only.

The big change — a three-way election. For any tax year of the marriage, a servicemember and spouse may elect to use, for state income tax purposes, any one of [50 U.S.C. § 4001(a)(3)]:

1. the servicemember's domicile;
2. the spouse's domicile; or
3. the servicemember's permanent duty station.

They don't have to live in the duty-station state, don't have to file jointly, and each may make the election — even electing different states. For South Carolina, you make the election simply by filing your SC1040 as a resident or a nonresident.

The underlying SCRA rules the election builds on:

• Servicemember: generally keeps their home-state domicile, and military pay is taxed only by the domicile state [§ 4001(b)]. So a nonresident servicemember stationed in South Carolina owes no SC income tax on military pay; a South Carolina-resident servicemember stationed elsewhere does owe SC tax on all military pay (unless they elect a different domicile/duty station).
• Spouse: may keep their home-state domicile while living in another state solely to be with the servicemember, and that state can't tax the spouse's wages earned there [§ 4001(c)].

What South Carolina still taxes no matter what you elect:

• Non-military personal-service income earned in South Carolina (e.g., a servicemember's or spouse's civilian W-2 job in SC) is taxed by South Carolina.
• South Carolina-source income that isn't personal services — such as rent from SC property or capital gain on selling SC real estate — is South Carolina taxable income regardless of the domicile election (e.g., a $50,000 gain on selling an SC beach house).

Timing and status edge cases: marital status is generally fixed at year-end (or the date of a spouse's death) under IRC § 7703. The election is available for any year of the marriage regardless of the wedding date, and for any year in which the couple was married for any part of the year — so it still works in the year of a marriage, divorce, or separation (even if "considered unmarried" for filing status). But retired servicemembers, surviving spouses, and former spouses are not covered by the SCRA — their residency is set by ordinary state law. And a temporary duty assignment doesn't create an election option (a SC-domiciled servicemember with a temporary TDY elsewhere stays SC-domiciled all year).

Payroll withholding. A servicemember or spouse working in South Carolina who uses a different domicile state should give the employer a Form SC W-4 (asking the employer not to withhold SC tax), plus the servicemember's most recent orders (duty station and dates), the Leave and Earnings Statement (showing domicile), and the spouse's military dependent ID/privilege card. The SC W-4 is annual — it expires December 31 and must be renewed. If South Carolina tax was withheld anyway, file an SC return with the nonresident schedule to claim a refund.

The ruling attaches the full text of 50 U.S.C. § 4001 and works through eight examples covering resident and nonresident couples, border-state stationing, SC-source gains, temporary duty, and death/marriage/divorce during the year.

What this means for you

Servicemembers and military spouses

If South Carolina is in your picture — as your home state, your spouse's home state, or your duty station — you likely have a choice of which state taxes your income, and it can meaningfully change your bill. Common wins: a SC-resident servicemember stationed out of state can elect the duty station or the spouse's domicile to keep military pay out of SC tax; a couple stationed in SC but domiciled elsewhere simply doesn't elect SC. But don't over-read it — your civilian SC wages and any SC rental income or SC property gains stay taxable here. Keep your orders and Leave & Earnings Statement handy, file the SC W-4 every year, and if SC tax got withheld in error, file a nonresident SC return to get it back.

Employers of military families

Honor a properly documented Form SC W-4 and verify the orders, Leave and Earnings Statement, and dependent ID (you may document rather than keep copies). The SC W-4 must be renewed each calendar year, and a domicile change mid-year calls for an updated form. If you believe an exemption certificate is wrong, forward it to the Department within 30 days; otherwise withhold per the claimed exemption [§ 12-8-1030].

Accountants and tax preparers

Layer the analysis: (1) the SCRA baseline — military pay taxed only in domicile [§ 4001(b)], spouse's wages protected in the non-domicile duty state [§ 4001(c)]; (2) the VAEIA three-way election [§ 4001(a)(3)], made via SC1040 resident/nonresident filing, available per-spouse and for any year of the marriage; and (3) the carve-outs SC always taxes — SC-earned non-military services and SC-source non-service income (rent, SC-property gains) under § 12-6-2220. Confirm SCRA eligibility (not retired/surviving/former; not a mere temporary duty station), fix marital status at year-end per IRC § 7703, and use the § 12-6-3400 other-state credit where a resident is double-taxed.

Common questions

Q: Can a military couple choose which state taxes their income?
A: Yes. For 2023 and later, they may elect the servicemember's domicile, the spouse's domicile, or the servicemember's permanent duty station — and they don't have to pick the same state or file jointly.

Q: I'm a South Carolina servicemember stationed in another state. Is my military pay taxed by SC?
A: If South Carolina remains your domicile, yes — SC taxes all your military pay. But you can elect the duty station or your spouse's out-of-state domicile to keep military pay out of SC income.

Q: My spouse works in South Carolina but we're domiciled elsewhere. Are those wages taxed here?
A: No, if the spouse lives in SC solely to be with the servicemember and doesn't elect SC domicile. But a servicemember's or spouse's civilian SC wages are taxable if you elect SC, and civilian SC wages of a servicemember are taxed regardless.

Q: We're domiciled out of state but sold our South Carolina house. Is the gain taxed here?
A: Yes. South Carolina-source income like gain on SC real estate (or SC rental income) is South Carolina taxable income no matter which state you elect for domicile.

Q: Does this help retired servicemembers or surviving/former spouses?
A: No. The SCRA election doesn't cover retired servicemembers, surviving spouses, or former spouses — their residency is determined by ordinary state law.

Q: SC tax was withheld from my pay but I elect another state. How do I fix it?
A: File a South Carolina income tax return with the nonresident schedule showing no SC income to claim a refund, and give your employer a Form SC W-4 (renewed annually) to stop future withholding.

Citations and references

Federal:

• 50 U.S.C. § 4001 — SCRA residence-for-tax rules as amended by the VAEIA: (a)(1)–(2) domicile not lost/gained by military presence, (a)(3) the three-way election, (b) military pay taxed only in domicile, (c) military-spouse income protection

South Carolina statutes:

• S.C. Code Ann. § 12-6-30 — resident individual means one domiciled in South Carolina
• S.C. Code Ann. § 12-6-2220 — allocation of income, including SC-source non-service income (rent, SC-property gains)
• S.C. Code Ann. § 12-6-3400 — credit for income taxes paid to another state
• S.C. Code Ann. § 12-6-1720 — taxation of resident and nonresident individuals
• S.C. Code Ann. § 12-8-1030 — employer withholding on claimed exemption certificates

Discussed in prose (not linked): RR #21-10 (the prior guidance this ruling supersedes for 2023+); Brewington v. Brewington, 280 S.C. 502, 313 S.E.2d 53 (1984) (legal separation does not end a marriage); the Department's "Determining a Taxpayer's Domicile for Income Tax Purposes" manual.

Source

• Landing page: SC Advisory Opinion Search
• Original PDF: RR24-5.pdf

Original ruling text

STATE OF SOUTH CAROLINA

DEPARTMENT OF REVENUE
300A Outlet Pointe Blvd., Columbia, South Carolina 29210
P.O. Box 125, Columbia, South Carolina 29214-0575

SC REVENUE RULING #24-5
SUBJECT:

Military Servicemember and Spouse – Domicile and Taxation
(Income Tax)

EFFECTIVE DATE:

Applies to tax years beginning on or after January 1, 2023.

SUPERSEDES:

S.C. Revenue Ruling #21-10 for tax years beginning on or after January
1, 2023

REFERENCES:

S.C. Code Ann. § 12-6-30
S.C. Code Ann. § 12-6-1720
S.C. Code Ann. § 12-6-2220
S.C. Code Ann. § 12-6-3400
50 U.S.C. §4001

AUTHORITY:

S.C. Code Ann. § 12-4-320
S.C. Code Ann. § 1-23-10(4)
S.C. Revenue Procedure #09-3

SCOPE:

The purpose of a Revenue Ruling is to provide guidance to the public.
It is an advisory opinion issued to apply principles of tax law to a set of
facts or general category of taxpayers. It is the Department’s position
until superseded or modified by a change in statute, regulation, court
decision, or another Department advisory opinion.

The Veterans Auto and Education Improvement Act 1 (VAEIA) was enacted on January 5, 2023.
Section 18 of this Federal Act amends the Servicemembers Civil Relief Act 2 (SCRA) to allow a
military servicemember and spouse to elect to use the residence or domicile 3 of the
servicemember or the spouse, or the permanent duty station of the servicemember, for state tax
P.L. 117-333 (January 5, 2023). The Veterans Auto and Education Improvement Act of 2022 applies to any
taxable year that includes the date of enactment, including 2023 individual income tax returns.
2
P.L. 108-189 (December 19, 2003). The Servicemembers Civil Relief Act revised and replaced the Soldiers’ and
Sailors’ Relief Act.
3
The SCRA uses the terms “domicile” and “resident” or “residency” interchangeably. This advisory opinion will
use the term “domicile.”
1

1

purposes. The purpose of this advisory opinion is to update SC Revenue Ruling #21-10 to
address the impact on South Carolina income tax filings of the changes made by VAEIA Section

18. This advisory opinion does not address any other provisions of the VAEIA.
    This Ruling provides the South Carolina Department of Revenue’s opinion on the application of
    South Carolina law to Section 18 of the VAEIA and 50 U.S.C. § 4001. Other states may have
    different interpretations. Military servicemembers and their spouses who are domiciled or
    stationed in other states should consult with those states to determine their interpretation of their
    law, the SCRA, and any filing requirements.
    The SCRA provisions relating to residence or domicile for tax purposes apply for income taxes
    and for personal property taxes. This advisory opinion addresses the impacts on South Carolina
    income tax only and does not address potential impacts on other South Carolina tax types,
    including personal property tax.
    For reference, 50 U.S.C. § 4001 is attached in its entirety.
    General South Carolina Income Tax Principles
    For South Carolina income tax purposes, a South Carolina resident individual means an
    individual domiciled in this State. 4 Individuals are domiciled in South Carolina if South Carolina
    is their permanent home and is the place to which they intend to return when absent. 5
    A resident individual is taxed on all personal service income, no matter where it is earned. 6 If the
    South Carolina resident is taxed by another state for personal services performed in that state, the
    resident individual may claim a credit against South Carolina income taxes for taxes paid in the
    other state. 7 A nonresident individual is only taxed on personal service income earned in South
    Carolina.
    Servicemember Domicile and Taxation
    A servicemember is an individual who is a member of the uniformed services, as defined in 10
    U.S.C. § 101(a)(5) 8. The SCRA, as amended, provides that servicemembers generally remain
    domiciled in their home state for tax purposes when serving in another state in compliance with
    military orders 9 and are taxed on military pay only in their domicile state. 10 As a result, unless a
    servicemember makes an election in accordance with 50 U.S.C. § 4001(a)(3) that changes this
    S.C. Code Ann. § 12-6-30
    See the Determining a Taxpayer’s Domicile for Income Tax Purposes manual available at dor.sc.gov for an
    overview of South Carolina’s residency and domicile rules for income tax purposes.
    6
    S.C. Code Ann. § 12-6-2220(6)
    7
    S.C. Code Ann. § 12-6-3400
    8
    50 U.S.C. §3911(1)
    9
    50 U.S.C. §4001(a)(1)
    10
    50 U.S.C. §4001(b)
    4
    5

2

result, a nonresident military servicemember stationed in South Carolina is not subject to South
Carolina income tax on military service pay, while South Carolina residents stationed in another
state will be subject to South Carolina income tax on all military service pay.
Any other personal service income earned in South Carolina by a nonresident servicemember,
such as W-2 wages earned at a civilian job, is subject to South Carolina income tax.
Servicemember’s Spouse Domicile and Taxation
The SCRA, as amended, allows a servicemember’s spouse to remain domiciled in the spouse’s
home state for tax purposes when living in another state solely to be with the servicemember
who is serving in compliance with military orders. 11 Personal service income earned by the
servicemember’s spouse is not taxed by the state where it was earned if the spouse is not
domiciled in that state and is only living in the state in order to be with the servicemember
serving in compliance with military orders. 12
Domicile Elections under the VAEIA
Beginning with the 2023 tax year, a servicemember and spouse may elect to use any of the
following as the state of domicile for tax purposes:

1. The domicile state of the servicemember;
2. The domicile state of the spouse; or
3. The permanent duty station of the servicemember. 13
   The military servicemember and spouse are not required to live in the same state as the
   permanent duty station to qualify for the elections. The servicemember and spouse may each
   make the election and are not required to file jointly or to elect the same state for tax purposes.
   Servicemembers and their spouses make the election for South Carolina income tax purposes
   when choosing to file their SC1040 return as a South Carolina resident or nonresident.
   For South Carolina income tax purposes: 14
4. Military servicemembers who are domiciled in South Carolina are not taxed on military
   income if they elect to use the domicile state of their nonresident spouse or their
   permanent duty station outside of South Carolina. See Example 1.
   50 U.S.C. §4001(a)(2)
   50 U.S.C. §4001(c)
   13
   50 U.S.C. §4001(a)(3)
   14
   Other states may have different interpretations of the federal SCRA. Military servicemembers and their spouses
   should consult with other states to determine their interpretation of the SCRA and any filing requirements in that
   state.
   11
   12

3

2. South Carolina income tax applies to military income for servicemembers who are not
domiciled in South Carolina only if they are stationed in South Carolina or married to an
individual who is domiciled in South Carolina and they elect to use South Carolina as their
domicile state for tax purposes. See Example 2.

3. Military servicemembers who have non-military personal service income earned in South
   Carolina are taxed on that income, regardless of domicile. See Example 2.
4. Servicemember spouses domiciled in South Carolina are not taxed in South Carolina on
   personal service income if the spouse elects for tax purposes to use the domicile state of
   the servicemember or the permanent duty station outside of South Carolina. See Example
   1.
5. Nonresident spouses are taxed in South Carolina on personal service income only if they
   elect for tax purposes to use the South Carolina domicile of the servicemember or the
   permanent duty station in South Carolina. See Examples 2 and 3.
6. South Carolina sourced income items unrelated to personal services and earned by
   military servicemembers or spouses, such as South Carolina rental income or gain on the
   sale of a property located in South Carolina, are included in South Carolina taxable
   income regardless of their domicile for tax purposes under the VAEIA. 15 See Example 4.
   For income tax filing purposes, marital status, as defined in I.R.C. § 7703, is generally
   determined as of the close of the tax year. However, for a taxpayer whose spouse dies during the
   tax year, marital status is determined as of the date of the spouse’s death. See Example 6.
   Under the VAEIA, the domicile election may be made for any taxable year of the marriage,
   regardless of the date on which the marriage occurred. See Example 7. If the servicemember and
   spouse divorce, the election may be made for years during which the servicemember and spouse
   were married for any portion of the year. See Example 8. If the servicemember and spouse are
   separated during the year, but not legally divorced, 16 the servicemember and spouse may still
   make the election, even if they are “considered unmarried” under I.R.C. § 7703 for income tax
   filing purposes.
   Military spouses who do not meet the SCRA requirements will have residency determined by
   state law. Retired military servicemembers, surviving spouses, and former spouses are not
   covered by the SCRA, so residency is determined under state law.

15
Income allocated to the state of domicile, such as interest and dividends not connected with the taxpayer’s
business, is not included in South Carolina taxable income for a servicemember or spouse domiciled in another state.
See S.C. Code §12-6-2220 for income allocated to South Carolina.
16
Legal separation, unlike divorce, does not terminate a marriage. See Brewington v. Brewington, 280 S.C. 502, 313
S.E.2d 53 (1984).

4

Wage Withholding
Servicemembers and spouses who are working in South Carolina, but who have or elect to use a
different domicile state for income tax purposes, should provide their employer with the
following:

1. Form SC W-4, “South Carolina Employee’s Withholding Allowance Certificate”
   requesting the employer not to withhold South Carolina income tax on personal service
   income;
2. The servicemember’s most recent orders showing the permanent duty station and dates;
3. The servicemember’s most recent “Leave and Earnings Statement” showing the domicile
   of the servicemember; and
4. The spouse’s dependent identification and privilege card identifying the employee as a
   military spouse.
   The Form SC W-4 is an annual form and must be completed each calendar year. The exemption
   from withholding expires on December 31 unless a new SC W-4 is submitted to the employer.
   In some cases, the state of domicile may change during the year. In these instances, the
   servicemember and/or spouse should provide the employer with an updated SC W-4 for their
   employer to correctly withhold South Carolina income taxes during the remainder of the tax
   year.
   The employer must retain the completed SC W-4, and must verify the qualifying information on
   the orders, the leave and earnings statement, and the dependent identification and privilege card.
   Employers are not required to retain copies of the military documentation that was verified, if
   documented in the employer’s records. 17 If an employer believes an employee’s withholding
   exemption certificate is incorrect, the employer will forward a copy of the certificate to the
   Department within 30 days. Unless otherwise informed by the Department, the employer will
   withhold based on the claimed exemption. 18
   The servicemember and/or spouse should provide the employer with the completed SC W-4 at
   the beginning of a new year or after a change in domicile. An untimely or inaccurate SC W-4
   will result in the employer withholding South Carolina income taxes. A servicemember or
   spouse who has South Carolina income tax withheld and shown on a W-2, but elects to use a
   different domicile state for income tax purposes, must file a South Carolina income tax return
   with nonresident schedule to request a refund of the overpayment of income taxes.

Section 701, Title 18 of the United States Code states that military ID cards may only be copied for authorized
purposes. Under DoDI (Department of Defense Instruction) 1000.13, photocopying ID cards to facilitate tax matters
is an example of authorized photocopying.
18
S.C. Code Ann. § 12-8-1030(A)
17

5

Examples
The following examples are for a military servicemember (Servicemember) and a military
servicemember’s spouse (Spouse) beginning with the 2023 tax year. Unless otherwise provided,
the examples assume the couple is married filing jointly and Servicemember and Spouse elect to
use the same domicile for state income tax purposes. These examples show the impact of the
VAEIA on South Carolina income tax filings. Servicemembers and their spouses making
domicile elections in another state should consult with that state to determine any filing
requirements.

1. Servicemember and Spouse are South Carolina residents stationed in another state.
   Servicemember and Spouse are both domiciled in South Carolina. Servicemember’s
   permanent duty station is in Florida. Servicemember lives in Florida in order to be in
   compliance with military orders, and Spouse lives in Florida in order to be with
   Servicemember. Spouse works full time in Florida and receives W-2 wages.
   Servicemember and Spouse may elect to choose either South Carolina or Florida as their
   domicile state for income tax purposes.
   South Carolina: If Servicemember and Spouse elect South Carolina as their domicile
   state, they will file a South Carolina resident return and include all personal service
   income (Servicemember’s military income and Spouse’s W-2 wages) as South Carolina
   taxable income.
   Florida: If Servicemember and Spouse elect Florida as their domicile state, the military
   income and Spouse’s personal service income will not be taxed in South Carolina. If
   Servicemember or Spouse had any South Carolina withholding shown on a W-2, they
   should file a South Carolina income tax return with a nonresident schedule showing no
   South Carolina income. They should attach a statement that they are electing Florida as
   the domicile state under the VAEIA along with a copy of the military orders showing
   Florida as the permanent duty station and the dates stationed in Florida. Taxpayers who
   file electronically and are unable to include attachments should keep the supporting
   documents with their tax records until requested as part of an audit or review of the
   return.
   2.

Servicemember and Spouse are nonresidents stationed in South Carolina.
Servicemember is domiciled in Texas, and Spouse is domiciled in Georgia.
Servicemember’s permanent duty station is in South Carolina. Servicemember lives in
South Carolina in order to be in compliance with military orders, and Spouse lives in
South Carolina in order to be with Servicemember. Servicemember has a part-time
civilian job in South Carolina, in addition to the military service, and receives W-2
wages. Spouse works full time in South Carolina and receives W-2 wages.
Servicemember and Spouse may elect to use Texas, Georgia, or South Carolina as their
domicile state for income tax purposes.
6

South Carolina: If Servicemember and Spouse elect South Carolina as their domicile
state, they will file a South Carolina resident return and include all personal service
income (Servicemember’s military income, Servicemember’s income from the civilian
job, and Spouse’s W-2 wage income) as South Carolina taxable income.
Texas/Georgia: If Servicemember and Spouse elect Texas or Georgia as their domicile
state, the wages Servicemember earns at the part-time civilian job will still be included in
South Carolina taxable income. The military income and Spouse’s personal service
income will not be taxed in South Carolina. Servicemember and Spouse should file a
South Carolina income tax return with nonresident schedule and only include the income
taxed in South Carolina.
3.

Servicemember and Spouse are nonresidents stationed in a South Carolina border state.
Servicemember and Spouse are both domiciled in North Carolina. Servicemember’s
permanent duty station is in Georgia. Servicemember lives in South Carolina solely in
order to be in compliance with military orders, and Spouse lives in South Carolina in
order to be with Servicemember. Spouse works full time in South Carolina and receives
W-2 wages. Servicemember and Spouse may elect to use either North Carolina or
Georgia as their domicile state for income tax purposes. Since they are not domiciled in
South Carolina, and are not stationed in South Carolina, they may not elect to use South
Carolina as their domicile state for income tax purposes.
South Carolina: The personal service income earned by Spouse is not considered to be
from services performed in South Carolina so is not subject to South Carolina income
tax. If Spouse had South Carolina withholding shown on a W-2, they should file a South
Carolina income tax return with a nonresident schedule showing no South Carolina
income, and include a copy of the military orders showing the permanent duty station is
in Georgia and the dates stationed there. Taxpayers who file electronically and are unable
include attachments should keep copies of the supporting documents with their tax
records until requested as part of an audit or review of the return.

4.

Servicemember and Spouse are nonresidents with other South Carolina sourced income.
Servicemember and Spouse are both domiciled in Texas. Servicemember’s permanent
duty station is in Georgia. Servicemember lives in Georgia in order to be in compliance
with military orders, and Spouse lives in Georgia solely in order to be with
Servicemember. During the tax year, Servicemember and Spouse sold their South
Carolina beach house and have $50,000 of taxable capital gains on the sale.
Servicemember and Spouse may elect to use either Texas or Georgia as their domicile
state for tax purposes.
South Carolina: The capital gain from the sale of the South Carolina property is allocated
to South Carolina 19 and included in South Carolina taxable income. Servicemember and

19

S.C. Code Ann. §12-6-2220(4)

7

Spouse should file a South Carolina income tax return with a nonresident schedule
showing the $50,000 capital gain as South Carolina taxable income.
5.

Servicemember has a temporary change of duty station.
Servicemember and Spouse are both domiciled in South Carolina. Servicemember’s
permanent duty station is in South Carolina. Servicemember receives a temporary duty
assignment in Texas during the tax year. Servicemember and Spouse are considered
domiciled in South Carolina for income tax purposes for the entire tax year, so all
military pay will be included in South Carolina taxable income. Servicemember and
spouse cannot elect to use the temporary duty location as their domicile state.

6. Servicemember death occurs during the tax year.
   Servicemember is domiciled in Florida, and Spouse is domiciled in South Carolina.
   Servicemember’s permanent duty station is in South Carolina. Servicemember lives in
   South Carolina in order to be in compliance with military orders, and Spouse lives in South
   Carolina in order to be with Servicemember. Servicemember dies during the tax year, and
   Spouse does not remarry. For income tax purposes, Servicemember and Spouse are
   considered married for the tax year. Spouse may elect to use either Florida or South
   Carolina as the domicile state for income tax purposes.
   In future tax years, Spouse will be considered a surviving spouse and will not be able to
   use 50 U.S.C. § 4001(c) or make the election under 50 U.S.C. § 4001(a)(3). Instead,
   Spouse’s domicile will be determined by state law.
7. Servicemember and Spouse marry during the tax year.
   Servicemember and Spouse get married in December of the tax year. For income tax
   purposes, under I.R.C. § 7703, Servicemember and Spouse are considered married for the
   tax year. Servicemember is domiciled in Texas, and Spouse is domiciled in South Carolina.
   Servicemember’s permanent duty station is in Georgia. Servicemember lives in Georgia in
   order to be in compliance with military orders, and Spouse lives in Georgia in order to be
   with Servicemember. Servicemember and Spouse may elect to use Texas, South Carolina,
   or Georgia as their domicile state for the entire year for income tax purposes.
8. Servicemember and Spouse divorce during the tax year.
   Servicemember is domiciled in Texas, and Spouse is domiciled in South Carolina.
   Servicemember’s permanent duty station is in Georgia. Servicemember lives in Georgia in
   order to be in compliance with military orders, and Spouse lives in Georgia in order to be
   with Servicemember. Servicemember and Spouse divorce, and the divorce is finalized in
   November of the tax year. Servicemember and Spouse do not remarry during the tax year.

8

The filing status for income tax purposes is determined as of the end of the tax year under
I.R.C. § 7703, so Servicemember and Spouse cannot file as married for the tax year.
However, the election under 50 U.S.C. § 4001(a)(3) is available for any taxable year of the
marriage. Therefore, since Servicemember and Spouse were married during the tax year,
they can still make the election for the tax year. Servicemember and Spouse each may elect
to use Texas, South Carolina, or Georgia as their domicile state for income tax purposes.
In future tax years, Spouse will be considered a former spouse and will not be able to make
the election under 50 U.S.C. § 4001(a)(3). Instead, Spouse’s domicile will be determined
by state law.
SOUTH CAROLINA DEPARTMENT OF REVENUE

s/W. Hartley Powell
W. Hartley Powell, Director
October 10
, 2024
Columbia, South Carolina

9

50 U.S.C §4001. Residence for tax purposes
(a) Residence or domicile
(1) In general
A servicemember shall neither lose nor acquire a residence or domicile for purposes of
taxation with respect to the person, personal property, or income of the servicemember by
reason of being absent or present in any tax jurisdiction of the United States solely in
compliance with military orders.
(2) Spouses
A spouse of a servicemember shall neither lose nor acquire a residence or domicile for
purposes of taxation with respect to the person, personal property, or income of the spouse
by reason of being absent or present in any tax jurisdiction of the United States solely to
be with the servicemember in compliance with the servicemember's military orders.
(3) Election
For any taxable year of the marriage, a servicemember and the spouse of such
servicemember may elect to use for purposes of taxation, regardless of the date on which
the marriage of the servicemember and the spouse occurred, any of the following:
(A) The residence or domicile of the servicemember.
(B) The residence or domicile of the spouse.
(C) The permanent duty station of the servicemember.
(b) Military service compensation
Compensation of a servicemember for military service shall not be deemed to be income
for services performed or from sources within a tax jurisdiction of the United States if the
servicemember is not a resident or domiciliary of the jurisdiction in which the
servicemember is serving in compliance with military orders.
(c) Income of a military spouse
Income for services performed by the spouse of a servicemember shall not be deemed to
be income for services performed or from sources within a tax jurisdiction of the United
States if the spouse is not a resident or domiciliary of the jurisdiction in which the income
is earned because the spouse is in the jurisdiction solely to be with the servicemember
serving in compliance with military orders.
(d) Personal property
(1) Relief from personal property taxes
The personal property of a servicemember or the spouse of a servicemember shall not be
deemed to be located or present in, or to have a situs for taxation in, the tax jurisdiction in
which the servicemember is serving in compliance with military orders.
(2) Exception for property within member's domicile or residence
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This subsection applies to personal property or its use within any tax jurisdiction other than
the servicemember's or the spouse's domicile or residence.
(3) Exception for property used in trade or business
This section does not prevent taxation by a tax jurisdiction with respect to personal property
used in or arising from a trade or business, if it has jurisdiction.
(4) Relationship to law of State of domicile
Eligibility for relief from personal property taxes under this subsection is not contingent
on whether or not such taxes are paid to the State of domicile.
(e) Increase of tax liability
A tax jurisdiction may not use the military compensation of a nonresident servicemember
to increase the tax liability imposed on other income earned by the nonresident
servicemember or spouse subject to tax by the jurisdiction.
(f) Federal Indian reservations
An Indian servicemember whose legal residence or domicile is a Federal Indian reservation
shall be taxed by the laws applicable to Federal Indian reservations and not the State where
the reservation is located.
(g) Definitions
For purposes of this section:
(1) Personal property
The term "personal property" means intangible and tangible property (including motor
vehicles).
(2) Taxation
The term "taxation" includes licenses, fees, or excises imposed with respect to motor
vehicles and their use, if the license, fee, or excise is paid by the servicemember in the
servicemember's State of domicile or residence.
(3) Tax jurisdiction
The term "tax jurisdiction" means a State or a political subdivision of a State.

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