Military Pay
Resident - If the taxpayer is a resident of Delaware they are subject to Delaware income tax on all income regardless of the source. This includes active duty military pay.
Nonresident - If the taxpayer is a nonresident of Delaware stationed in Delaware whose only source of income is active duty military pay, they are not required to file a Delaware return.
One spouse is a resident of Delaware and the other is not - Delaware permits taxpayers to file separately if one spouse is a resident of Delaware and the other is not. Taxpayers 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 Delaware resident, and a Delaware resident return filed MFS on different returns for the taxpayer. (This option is not yet available in TaxSlayer Pro when federal filing status is MFJ.)
- Federal MFS return for the spouse, and a Delaware nonresident return for the spouse. (The federal return won't be filed, only the Delaware return.)
To change the Delaware resident return filing status to MFS, from the Delaware Resident Menu select:
- Basic Info
- 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, then select Taxpayer or Spouse, and enter all the information that applies.
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 Delaware , the following conditions must be met by the military spouse/employee:
- The servicemember is in Delaware on military orders.
- Is legally married to the spouse.
- The spouse is in Delaware specifically to live with the servicemember.
If the military spouse meets the eligibility requirements, they can avoid Delaware state tax from being withheld from their pay by providing their employer with an Annual Withholding Tax Exemption Certification Form, Form W-4DE.
To claim a refund of taxes withheld from the Delaware income in error, from the nonresident Delaware Tax Return menu, select:
- Federal Income Subject to State Tax
- Adjustments to State Wages (+/-) - Enter non military spouse income as a negative number.
Note: This is an article on reporting military pay and military spouse pay in the TaxSlayer ProWeb program. It is not intended as tax advice.
Additional Information: