You are Michigan residents, and file a
joint return to Michigan. See
the following FAQ on Military Spouse rules, which explain why this is the
case: https://ttlc.intuit.com/replies/3302300 You will need to file a
Virginia return to get back the Virginia taxes.
There are two ways to do this.
You can “zero out” the Virginia income on TurboTax that your wife
earned, because it is not Virginia income.
(Best is for your wife to ask company to issue a corrected w-2 showing
her wages as Michigan income per MSRRA rules.
It would show zero income for Virginia but taxes taken out to
Virginia). Also, this will help the
company take out taxes only to Michigan, which is still your state of residence
for both of you. (Of course, your
military income is exempt in Michigan.
Make sure your W-2 is marked in TurboTax as active duty military).
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