Military Pay
Resident - If the taxpayer is a resident of Nebraska they are subject to Nebraska income tax on all income regardless of the source. This includes active duty military pay.
Nonresident - If the taxpayer is a nonresident of Nebraska stationed in Nebraska whose only source of income is active duty military pay, they are not required to file a Nebraska return.
One spouse is a resident of Nebraska 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 Nebraska 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 Nebraska.
Generally Nebraska does not permit a filing status change from the federal return. An exception is made if one spouse is a resident of Nebraska and the other spouse is a resident of a different state. To choose the filing status of Married Filing Separately from the Nebraska resident return menu select:
- Basic Information
- Change Filing Status from MFJ to MFS for State purposes only - Select Yes.
- MFS for State purposes only - Select who the return is for and complete all applicable fields.
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 Nebraska, the following conditions must be met by the military spouse/employee:
- The servicemember is present in Nebraska solely in compliance with military orders;
- The spouse is in Nebraska solely to be with the servicemember; and
- The spouse is a legal resident of the same state as the servicemember.
If the military spouse meets the eligibility requirements, they can avoid Nebraska state tax from being withheld from their pay by providing their employer with Form 9N Nebraska Nonresident Employee Certificate.
To claim a refund of taxes withheld from the Nebraska income in error, from the nonresident Nebraska Tax Return menu select:
- Income Subject to Tax
- Amounts Derived from Nebraska Sources
- Income of a Servicemember's Spouse - Enter the spouse wages as a positive number.
Note: This is an article on reporting military pay and military spouse pay in TaxSlayer ProWeb. It is not intended as tax advice.
Additional Information:
Nebraska Individual Income Tax Booklet
Nebraska Income Tax for U.S. Servicemembers, Their Spouses, and Civilians Working with U.S. Forces