Military Pay
Resident - If the service member is a resident of Iowa and stationed in Iowa on active duty, they are permitted to subtract their military pay. To make this subtraction in the Iowa resident return, select:
- Net Income
- Total Adjustments
- Other Adjustments - Select NEW, choose Active Duty Military Pay from the dropdown menu, and enter the applicable amount of pay to subtract as a positive number.
Iowa follows federal law and provides income tax relief for servicemembers on active duty in combat zones.
Nonresident - If the taxpayer is a nonresident of Iowa stationed in Iowa whose only source of income is active duty military pay, they are not required to file an Iowa return.
One spouse is a resident of Iowa 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 an Iowa 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 Iowa .
Iowa does allow two Married Filing Separate options. To select a married filing separate option in the Iowa resident return, select:
- Personal Information
- Filing Status - Select either Married Filing Separately on this Combined Return or Married Filing Separate Returns.
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 Iowa , the following conditions must be met by the military spouse/employee:
- the servicemember spouse is a member of the uniformed services present in Iowa in compliance with his or her orders
- the non-servicemember spouse is present in Iowa solely to be with the servicemember spouse
-
the non-servicemember spouse is a resident of another state
- the non-servicemember spouse elects to use the same residence as the servicemember spouse for tax purposes
If the military spouse meets the eligibility requirements, they can avoid Iowa state tax from being withheld from their pay by providing their employer with Form IA W-4 Employee Withholding Allowance Certificate
To claim a refund of taxes withheld from the Iowa income in error, from the Iowa Nonresident Tax Return menu select:
- Nonresident & Part Year Resident Income Allocation
- Gross Income Taxable to Iowa
- Wages, Salaries, Tips, etc.
- Adjustments to State Wages (+/-) - Enter the spouse wages as a negative number
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:
Iowa DOR: IA 1040 Income Tax Return Instructions
Iowa DOR: Iowa Tax Responsibilities of Servicemembers and their Spouses