Military Pay
As of January 1, 2014, active duty military pay is exempt from income tax in Arkansas, including National Guard and Reserve Units. This income must be manually subtracted from the Arkansas resident return by selecting:
- Subtractions From Income
- Military Income Exclusion - Enter the military pay as a positive number.
If one spouse is a resident of Arkansas and the other is not, they can file separate state returns. From the Arkansas Return menu select:
- Basic Information
- Change Filing Status from MFJ to MFS for State purposes only
- Do you want to change the state filing status from MFJ to MFS? - Select YES.
- MFS for State Purposes Only
- Select whom are you filing this MFS return for - Select Taxpayer or Spouse and make any necessary adjustments to income and dependents 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 Arkansas, the following conditions must be met by the military spouse/employee:
- The spouse is not a military servicemember.
- The spouse is in Arkansas solely to be with the active duty military member.
- The spouse is married to a military servicemember.
- The active duty military member is present in Arkansas in compliance with military orders.
- 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 Arkansas Form ARW-4MS - Annual Withholding Tax Exemption Certificate For Military Spouse, if they are claiming exemption from Arkansas'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 Arkansas taxes are withheld, take the following steps to claim a refund of those taxes.
To claim a refund of taxes withheld from the Arkansas income, follow these steps from the Arkansas nonresident state return menu:
- Subtractions from income
- Military Spouses Residency Relieve Act, AR-MS - Select YES and complete the form.
Note: This is an article on reporting military related income in TaxSlayer Pro. It is not intended as tax advice.
Additional Information:
Arkansas DFA: Individual Income Tax Forms and Instructions
Arkansas DFA: Form ARW-4MS - Annual Withholding Tax Exemptions Certificate for Military Spouse