Military Pay
Resident - If the taxpayer is a resident of Maryland they are subject to Maryland income tax on all income regardless of the source. This includes Active Duty Military Pay. There is an exception to this rule for resident active duty taxpayers who are stationed outside of the United States its possessions. Up to $15,000 may be subtracted so long as total military pay does not exceed $30,000. The military income earned while serving outside of the U.S. needs to be subtracted from income.
To enter the military subtraction in TaxSlayer Pro, from the resident Maryland Tax Return Menu select:
- Total Maryland Adjusted Gross Income
- Subtractions to Income
- Other Subtractions from Income
- Other Subtractions from Income - Select New and Overseas military subtraction (limited to $15,000 per taxpayer).
Nonresident - If the taxpayer is a nonresident of Maryland stationed in Maryland whose only source of income is active duty military pay, they are not required to file an Maryland return.
One spouse is a resident of Maryland 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 Maryland 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 Maryland.
Maryland allows taxpayers to file as Married Filing Separately even when they have filed joint on their federal return. To change the filing status to MFS, from the resident Maryland Tax Return Menu select:
- Personal Information
- Filing Status - Select Married Filing Separately.
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 Maryland, the following conditions must be met by the military spouse/employee:
- The non-military spouse is not a member of the U.S. armed forces.
- The non-military spouse is married to an active duty member of the U.S. armed forces.
- The non-military spouse is domiciled in a state other than Maryland.
- The service member's permanent duty station is in Maryland, an immediate neighboring state, or the District of Columbia.
- The non-military spouse is residing and working in Maryland only to be the their military spouse while they are stationed in Maryland, an immediate neighboring state, or the District of Columbia
If the military spouse meets the eligibility requirements, they can avoid Maryland state tax from being withheld from their pay by providing their employer with Form MW507M.
To claim a refund of taxes withheld from the Maryland income in error, from the nonresident Maryland Tax Return Menu select:
- Subtractions to Income
- Other Subtractions
- Items Included in Federal Adjusted Gross Income
- Select from credit description list: Amount of income for services performed in MD by spouse of a member of the armed services.
- Enter the Subtraction Amount
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:
MD: Filing Facts for Military Personnel and Their Families
MD: Individual Tax Forms and Instructions
Maryland Administrative Release 1
Maryland Administrative Release 3
Maryland Administrative Release 37
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.