Notice for Military Servicepersons:
Servicemember's Civil Relief Act
The federal Servicemembers Civil Relief Act, P.L. No. 108-189, was signed into law on December 19, 2003. This Act specifically prohibits a state from considering a nonresident servicemember's military income when determining the tax rate to be applied against the portion of household income that may be taxed by that state.
Military compensation has never been considered taxable income to a nonresident servicemember under the New Jersey Gross Income Tax Act at N.J.S.A. 54A: 5-8. However, prior to the federal Act, a nonresident servicemember's military income was considered when determining the tax rate to be applied against the portion of household income that may be taxed by New Jersey, in accordance with N.J.S.A. 54A: 2-1.1. The statute requires that New Jersey determine the tax due from nonresidents by calculating the taxable income of a nonresident taxpayer, whether military or civilian, as if the taxpayer were a full-time resident. The total tax is then apportioned by the proportion of income that the state may tax.
Therefore, in conformance with the federal Act, nonresident servicemembers are no longer required to report their military service income in Column A (the amount of gross income from everywhere) on the New Jersey nonresident income tax return (NJ-1040NR).
P.L. No. 108-189 is effective for the 2003 tax year and applies any prior tax year that is not closed by the three-year statute of limitations. N.J.S.A. 54A: 9-8. Nonresident military servicemembers who filed prior-year nonresident New Jersey income tax returns and included military income in Column A of the NJ-1040NR may file an amended return to request a refund. An amended return for the taxable year 2000 must be filed on or before April 15, 2004.