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 for resident active duty taxpayers whose permanent home (domicile) was in New York State when they entered the military but they meet the conditions for nonresident status (of either Group A or Group B), their military pay is not subject to New York state income tax. 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 nonresident New York Return menu in TaxSlayer ProWeb select:
- Subtractions from Income
- Other Subtractions
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Other Subtractions:
- Type of Other Subtraction - Select Individuals.
- Other Subtractions Description - Select Military Nonresident Pay.
- Other Subtractions Amount - Enter the amount as a positive number.
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 an 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 resident New York Return menu select:
- Basic Information
- Change Filing Status from MFJ to MFS for State Purposes only - Click Yes.
- MFS for State purposes only - Select who the return is being completed for and answer 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 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 in error, from the nonresident New York Return menu select:
- Income Subject to Tax
- Amount of wages earned from Military Spouses Residency Relief Act - Enter the eligible wages as a positive number.
Note that if the spouse's New York employer withheld tax in error, the W-2 entry in the spouse's separate tax return will need to be modified, removing the state wages in Box 16 but leaving the state withholdings in Box 17.
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:
NY DTF: Information for military personnel & veterans
NY DTF: Military Spouses Residency Relief Act
NY DTF: Form IT-201, Resident Income Tax Return Instructions
NY DTF: Form IT-203, Nonresident Income Tax Return Instructions
New York State Tax Information
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