Desktop: Connecticut Military Pay and Spouse Income

Military Pay

Resident - If the taxpayer is a resident of Connecticut they are subject to Connecticut income tax on all income regardless of the source. This includes active duty military pay.

Nonresident - If the taxpayer is a nonresident of Connecticut stationed in Connecticut whose only source of income is active duty military pay, they are not required to file a Connecticut return.

One spouse is a resident of Connecticut and the other is not - A servicemember’s spouse may elect, for income tax purposes, to use the same state of residence as the servicemember. If a servicemember is not a Connecticut resident, and is instead a resident of another state, his or her spouse can elect to also be a resident of that state and not a resident of Connecticut.

Connecticut does not permit a filing status change from the federal return. If they are married filing joint on the federal return, they are required to file married filing joint on the Connecticut return and the spouse will be required to use the same residency status as the servicemember.

Spouse Income - Military Spouses Residency Relief Act (MSRRA)

The MSRRA allows military spouses who reside with their service member spouse stationed in a nonresident state on military orders to keep their resident state for tax purposes. This means if the spouse has income from the nonresident state, they are not required to pay taxes to the nonresident state but report this income on their resident state return.

In order to be eligible for the income exemption under the MSRRA in Connecticut , the following conditions must be met by the military spouse/employee:

• The military spouse and the servicemember have the same state of domicile other than Connecticut;
• The military spouse is in Connecticut solely to be with the servicemember; and
• The servicemember is in Connecticut serving in compliance with military orders.

If the military spouse meets the eligibility requirements, they can avoid Connecticut state tax from being withheld from their pay by providing their employer with an Form CT-W4 Employee’s Withholding Certificate.

To claim a refund of taxes withheld from the Connecticut income in error, from the nonresident Connecticut Tax Return menu, select:

• Income From CT Sources (Schedule CT-SI)
• Adjustments to CT Income
• Other Adjustments - Enter the spouse wages as a negative number.

A military spouse who qualifies for the MSRRA exemption, and who, if applicable, has made the election to use the servicemember’s state of domicile, who had Connecticut income tax withheld from his or her wages, may file a claim for refund of any amount withheld from his or her wages. The military spouse must file in paper form Form CT-1040NR/PY, Connecticut Nonresident and Part-Year Resident Income Tax Return, write “Military Spouse” across the top of the return and attach the following documents:

• A letter signed by the military spouse stating that he or she is claiming the MSRRA exemption on the wages earned in Connecticut and that he or she meets all the requirements to claim the exemption under the MSRRA;
  • If the military spouse is electing to use the state of domicile (residence) of the servicemember, the letter must include the following statement:
    • My spouse is a servicemember stationed in the state of ______.
    • He or she is a resident of the State of ______.
    • I am a resident of the State of ______.
    • Pursuant to the Veterans Benefits and Transitions Act of 2018, I elect to use the State of ______ as my state of residence for Connecticut income tax purposes for taxable year ______;
• A copy of the servicemember’s Leave and Earnings Statement; and
• A copy of the military ID issued to the military spouse.

Note: This is an article on reporting military pay and military spouse pay in the TaxSlayer Pro program. It is not intended as tax advice.

Additional Information:

Connecticut DRS: State Income Tax Information for Military Personnel and Veterans

Connecticut DRS: Resident Income Tax Return Instructions