Military Pay
Resident - If the taxpayer is a resident of New York they are subject to New York income tax on all income regardless of the source. This includes active duty military pay.
There is an exception to this rule, however. Military pay is not subject to New York state income tax for active duty taxpayers whose permanent home (domicile) was in New York when they entered the military but they now meet the conditions for nonresident status (of either Group A or Group B). If they meet the conditions for nonresident status, and are required to file a New York State income tax return, use Form IT-203, Nonresident and Part-Year Resident Income Tax Return.
The qualified income must be manually subtracted from the New York nonresident return by selecting:
- New York Taxable Income
- New York Subtractions from AGI
- Other Subtractions
- Total Individual Subtractions - Select New and choose Military Pay. Enter the qualified amount as a positive number in both the Total Amount and NYS Allocated Amount fields.
Nonresident - If the taxpayer is a nonresident of New York stationed in New York whose only source of income is active duty military pay, they are not required to file a New York return.
One spouse is a resident of New York 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 New York 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 New York .
New York 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 New York resident tax return 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 New York , the following conditions must be met by the military spouse/employee:
- The military spouse is a nonresident of New York State.
- The military spouse is in New York State solely to be with the servicemember and the
servicemember is in New York State in compliance with his or her military orders.
If the military spouse meets the eligibility requirements, they can avoid New York state tax from being withheld from their pay by providing their employer with a Form IT-2104-E Certificate of Exemption from Withholding.
To claim a refund of taxes withheld from the New York income in error, from the New York nonresident return, select:
- New York Taxable Income
- Federal Adjusted Gross Income
- Wages, Salaries, Tips, etc.
- Other Wages
- Adjustments to State Wages (+/-) - Enter the eligible 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:
NY DTF: Information for military personnel & veterans
NY DTF: Military Spouses Residency Relief Act
NY DTF: Form IT-201 Full-Year Resident Income Tax Return instructions
NY DTF: Form IT-203 Nonresident and Part-Year Resident Income Tax Return instructions