Military Pay
Arizona does not tax military income. To subtract this income from the Arizona resident tax return in TaxSlayer Pro, from the Arizona state menu select:
- Subtractions From Income
- Enter Active Duty Military/Reserve/National Guard Pay - Enter the military pay as a positive number
If one spouse is a resident of Arizona and the other is not, you can file separate state returns. From the Arizona state menu select:
- Basic Information
- Filing Status - Select Married Filing Separately.
- Do you wish to repull income and deductions for MFS allocation? - Select YES.
- 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 should provide their employer with a current valid military identification and a current Leave and Earnings Statement along with Form WEC - Withholding Exemption Certificate, if they are claiming exemption from Arizona's income tax withholding requirements based on the conditions set forth under the Military Spouses Residency Relief Act (P.L. 111-97). If that is not done and Arizona taxes are withheld, take the following steps to claim a refund of those taxes.
To claim a refund of taxes withheld from the Arizona income, follow these steps from the Arizona nonresident state return menu:
- 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