Resident - If the service member is a resident of Idaho and stationed in Idaho, they are subject to Idaho income tax on all income regardless of the source. This includes active duty military pay.
If the service member is a resident of Idaho but stationed outside of Idaho, they may be able to exclude part of their military pay if:
- The servicemember joined the armed forces while they were a resident of Idaho and Idaho is their registered address;
- The servicemember was on active duty for 120 consecutive days or more during the tax year;
- The servicemember was stationed outside the state of Idaho for all or least part of the year.
If they meet the above requirements, they will still declare all income, however only military income earned while serving in Idaho and all non-military income would be subject to tax.
To subtract the military income earned outside the state of Idaho, from the resident Idaho Tax Return select:
- Deductions From Income
- Active Duty Military Pay Earned Outside of Idaho - Enter the amount earned outside of Idaho as a positive number.
Idaho follows federal law and provides income tax relief for servicemembers on active duty in combat zones.
Nonresident - If the taxpayer is a nonresident of Idaho stationed in Idaho whose only source of income is active duty military pay, they are not required to file an Idaho return.
One spouse is a resident of Idaho 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 Idaho 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 Idaho.
Idaho 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 Idaho 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 Idaho, the following conditions must be met by the military spouse/employee:
- You’re married to a servicemember who’s serving in Idaho and the servicemember registered their home of record in another state, and
- You’ve moved to Idaho with the servicemember and have the same domicile (permanent residence) as the servicemember’s home of record
If the military spouse meets the eligibility requirements, they can avoid Idaho state tax from being withheld from their pay by providing their employer with Form ID-MS1 Employee’s Idaho Military Spouse Withholding Exemption Certificate.
To claim a refund of taxes withheld from the Idaho income in error, from the Idaho Nonresident Tax Return menu select:
- Deductions from Income
- Other Subtractions
- State - Other Subtractions - Enter the spouse wages as a positive number and enter MSRRA as the description.
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.