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:
- Subtractions from Income
- Other Adjustments - Select Add Other Adjustment, enter the amount as a positive number, select the owner and Active Duty Military Pay as the adjustment type.
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:
- Basic Information
- Select your Filing Status - Select Married Filing Separately on this Combined Return
- OR
- Change Filing Status from MFJ to Married filing separate returns from State purposes - Select Yes
- MFS for State purposes only - Select whom the MFS return is for and complete all applicable information
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:
- Basic Information
- Are you a Full-Year Resident of Iowa for the entire year? - Select No.
- Select the County where you lived on December 31st - Select Part Year / Non Resident and continue back to Iowa menu
- Adjustments to Income Subject to Tax
- Other Adjustments
- Add Other Adjustment - Enter amount of wages as a positive number and select the owner and adjustment type Military Exemptions
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:
Iowa DOR: IA 1040 Income Tax Return Instructions
Iowa DOR: Iowa Tax Responsibilities of Servicemembers and their Spouses