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Level 5
March 29, 2023
Question

How to tax income while in military.

  • March 29, 2023
  • 2 replies
  • 15 views

Client's home state is IL. He is on military orders in PA. His income is W2 from Army and rental house in IL. Spouse has IL income and PA income. IL does not tax military income and he can use his home state for tax purposes. I believe the spouse can as well, but she did pay taxes into PA on her W2. Would I do IL tax return and PA non resident? Wasn't sure if anyone was familiar with military taxes or not. Any guidance is greatly appreciated. 

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2 replies

dascpa
Level 11
March 29, 2023

find out his "state of record".  That's the state he declared upon entering the military.  Then look at that state and the state he earned income to see their rules.  Many states also have spousal income rules.  There is a military organization that has an online state by state guide.  Military returns can be problematic, especially when spouse's are non-military.

Level 6
March 29, 2023

PA will tax her income.