Military Pay
Resident - Military income is excluded from taxation in Michigan. To subtract military income in the Michigan individual return in TaxSlayer Pro, from the Michigan return menu select:
- Subtractions from Federal AGI
- Taxable SS or Military Pay (not retirement)
- Military Pay (not retirement) - Enter the military pay as a positive number.
Nonresident - If the taxpayer is a nonresident of Michigan stationed in Michigan whose only source of income is active duty military pay, they are not required to file an Michigan return.
One spouse is a resident of Michigan and the other is not - Michigan does not allow a MFS filing status if the federal return is MFJ. The Michigan resident will need to file a nonresident return for the resident income.
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 Michigan, the following conditions must be met by the military spouse/employee:
- The service member is present in that state due to military orders
- The spouse is in that state solely to accompany the service member
- The spouse maintains a domicile in another state
If the military spouse meets the eligibility requirements, they can avoid Michigan 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) Michigan Withholding Exemption Certificate Form MI-W4.
To claim a refund of taxes withheld from the Michigan income in error, follow these steps from the Michigan nonresident state return menu:
- Nonresident & Part Year Income Allocation
- Income Allocation
- Wages & Salaries
- 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:
MI DOT: Michigan Form MI-1040 Instructions
MI DOT: Is military pay exempt from Michigan individual income tax?