Military Pay
Resident - If the taxpayer is a resident of Oregon, they are subject to Oregon 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 Oregon during the tax year. The military income earned while serving outside of Oregon can be subtracted from income on the Oregon resident return.
This income must be manually subtracted in ProWeb, from the Oregon Resident Return menu select:
- Subtractions from Income
- Other Subtraction (1) - Select Military Pay and enter the amount as a positive number.
Nonresident - If the taxpayer is a nonresident of Oregon stationed in Oregon whose only source of income is active duty military pay, they are not required to file an Oregon return.
One spouse is a resident of Oregon 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 an Oregon 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 Oregon.
Oregon allows taxpayers to file using a married filing separately filing status even if the federal return was filed as married filing joint. To make this selection in the program, select:
- Basic Information
- Change Filing Status from MFJ to MFS for State purposes only - Select Yes and complete all applicable fields in the MFS for State purposes only section.
Note: Changing the filing status in the Oregon Nonresident Return is not yet supported in ProWeb.
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 Oregon, the following conditions must be met by the military spouse/employee:
- The servicemember is stationed in Oregon.
- The spouse is living in Oregon to be with the servicemember.
- The spouse is domiciled outside of Oregon.
If the military spouse meets the eligibility requirements, they can avoid Oregon state tax from being withheld from their pay by providing their employer with Form OR-W-4 Oregon Withholding Statement and Exemption Certificate.
To claim a refund of taxes withheld from the Oregon income in error, from the Nonresident Oregon Return menu select:
- Income Subject to Tax
- Amount to adjust state wages pulled from federal - Enter the 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:
Oregon DOR: Military Personnel
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.