Military Pay
Resident - Active duty military pay is exempt from income tax in Illinois. To subtract this income in TaxSlayer Pro, from the Illinois Resident Return menu select:
- Base Income (Income - Subtractions)
- Other Subtractions to Income - Click YES to completing Schedule M.
- Figure Subtractions
- Military Pay Earned - Enter the military pay as a positive number.
Nonresident - If the taxpayer is a nonresident of Illinois stationed in Illinois whose only source of income is active duty military pay, they are not required to file an Illinois return.
One spouse is a resident of Illinois and the other is not - They can elect to file separate Illinois returns or to file a joint return in which both taxpayer and spouse are treated as Illinois residents (or as part-year residents for the same period). They 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 Illinois resident, and an Illinois resident return filed MFS on different returns for the taxpayer.
- Federal MFS return for the spouse, and an Illinois nonresident return for the spouse. (The federal return won't be filed, only the Illinois return.)
To change the Illinois resident return filing status to MFS, from the Illinois Resident Menu select:
- Personal Information
- Filing Status - Select Married Filing Separately, then select the taxpayer or spouse.
Note: Changing filing status in the Illinois nonresident return is not yet supported in TaxSlayer Pro.
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 Illinois, the following conditions must be met by the military spouse/employee:
- you are a nonresident spouse of a service member, and
- you and your service member spouse have the same domicile, and you are in Illinois only to accompany your spouse on his or her military assignment, or
- you elect to use the same domicile as your service member spouse for the purposes of taxation and you are in Illinois, even if your service member spouse is not located in Illinois.
If the military spouse meets the eligibility requirements, they can avoid Illinois state tax from being withheld from their pay by providing their employer with (a) a current valid military identification, (b) a current Leave and Earnings Statement, and (c) IL-W-5-NR Employee’s Statement of Nonresidence in Illinois.
If the spouse's Illinois employer withheld tax in error, the spouse's W-2 entry will need to be modified, removing the state wages in Box 16 but leaving the state withholdings in Box 17.
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:
Illinois DOR: Form IL-1040 Instructions
Illinois DOR: Schedule NR IL-1040 Instructions
While TaxSlayer Pro strives to make the information and links contained on this page as timely and accurate as possible, TaxSlayer Pro makes no promise or guarantee about the timeliness, accuracy or completeness of the contents of this page. The information contained on this page is for general information and is not intended to be tax advice. The user is also encouraged to review the underlying state resources and publications.