Military Pay
Resident - Arizona does not tax military income. To subtract military income in the Arizona individual tax return in TaxSlayer Pro, from the Arizona Return menu select:
- Subtractions From Income
- Enter Active Duty Military/Reserve/National Guard Pay - Enter the military pay as a positive number.
Nonresident - If the taxpayer is a nonresident of Arizona stationed in Arizona whose only source of income is active duty military pay, they are not required to file an Arizona return.
One spouse is a resident of Arizona and the other is not - They can file separate state returns, one as a resident and the other as a nonresident. To accomplish this, you'll need to prepare two tax returns:
- Federal MFJ return with the primary taxpayer being the Arizona resident, and an Arizona resident return filed MFS for the taxpayer.
- Federal MFS return for the spouse, and an Arizona nonresident return for the spouse. (The federal return won't be filed, only the Arizona return.)
To change the Arizona resident return filing status to MFS in ProWeb, from the Arizona Return menu select:
- Basic Information
- Change Filing Status from MFJ to MFS for State purposes only - Select BEGIN.
- Do you want to change the state filing Status from MFJ to MFS? - Select Yes.
- MFS for State purposes only - Select BEGIN.
- Select whom are you filing return for? - Select Taxpayer or Spouse and make any necessary adjustments to income for the resident spouse.
Spouse Income - Military Spouses Residency Relief Act (MSRRA)
The MSRRA allows military spouses who are only in a state to be with their service member spouse stationed there on military orders, to keep their resident state for tax purposes. This means if the spouse has wage income from a nonresident state, they are not required to pay taxes for wages to the nonresident state. Military spouse income may be taxable on the resident state return.
In order to be eligible for the income exemption under the MSRRA in Arizona, the following conditions must be met by the military spouse/employee:
- The active duty military member is present in Arizona in compliance with military orders.
- The spouse is in Arizona solely to be with the active duty military member.
- The spouse maintains residence in another state, which is the same state of residence as the military member.
If the military spouse meets the eligibility requirements, they can avoid Arizona state tax from being withheld from their pay by providing their employer with Form WEC- Employee Withholding Exemption Certificate.
To claim a refund of taxes withheld from the Arizona income in ProWeb, from the nonresident Arizona Return menu select:
- Income Subject To Tax
- Do you qualify for Military Spouses Residency Relieve Act - Select YES.
- Military Spouse Wages that should not be included in the AZ return - Enter as a positive number.
Note: This is an article on reporting military related income in TaxSlayer ProWeb. It is not intended as tax advice.
Additional Information:
Arizona DOR: Military Tax Filing
Arizona DOR: AZ Form 140NR Nonresident Personal Income Tax Booklet
Arizona DOR: AZ Form 140 Resident Personal Income Tax Booklet
Arizona DOR: Pub 705 Spouses of Active Duty Military Members
While TaxSlayer Pro strives to make the information and links contained on this page as timely and accurate as possible, TaxSlayer Pro makes no promise or guarantee about the timeliness, accuracy or completeness of the contents of this page. The information contained on this page is for general information and is not intended to be tax advice. The user is also encouraged to review the underlying state resources and publications.