Military Pay
Resident - Military income is excluded from taxation in Kentucky. To subtract military income in TaxSlayer ProWeb, from the Kentucky Return menu select:
- Subtractions From Income
- Enter Active Duty Military Pay - Enter the military pay as a positive number.
Nonresident - If the taxpayer is a nonresident of Kentucky stationed in Kentucky whose only source of income is active duty military pay, they are not required to file a Kentucky return.
One spouse is a resident of Kentucky and the other is not - 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 Kentucky resident, and a Kentucky resident return filed MFS for the taxpayer.
- Federal MFS return for the spouse, and a Kentucky nonresident return for the spouse. (The federal return won't be filed, only the Kentucky return.)
To change the Kentucky resident return filing status to Married Filing Separate returns, from the Kentucky Return menu select:
- Basic Information
- Change Filing Status from MFJ to MFS for State purposes only
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 Kentucky, the following conditions must be met by the military spouse/employee:
- The active duty servicemember is present in Kentucky in compliance with military orders.
- The spouse is in Kentucky solely to be with the active duty servicemember.
- The spouse maintains residence in another state, which is the same state of residence as the servicemember.
If the military spouse meets the eligibility requirements, they can avoid Kentucky state tax from being withheld from their pay by providing their employer with (a) a current valid military identification and Form K-4, Kentucky's Withholding Certificate.
To claim a refund of taxes withheld from the Kentucky income in error, from the nonresident Kentucky Return menu select:
- Adjustments To Income
- Military Spouse Income - Select Yes in the menu under Are you a Military Spouse?, then enter the qualifying military spouse income included in the federal and Kentucky returns as appropriate.
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:
KY DOR: Kentucky Military Spouse Income Tax Relief
KY DOR: Kentucky Military Tax Issues
Kentucky State Tax Information
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.