It depends. If your brother is an Illinois resident, he may exclude his military pay. To correct the error, he needs to delete the military pay and re-enter it again. His military pay will generally be included in his federal adjusted gross income (AGI) on Form IL-1040, Line 1. He needs to do an adjustment on Illinois return and subtract the military pay on Schedule M of IL 1040.
According to Publication 102, "Illinois does not tax military pay earned by service persons as an Illinois resident and must file Form IL-1040, Individual Income Tax Return. You may subtract tax-exempt military pay that is in your AGI, including
- pay for duty in the armed forces, including basic training;
- pay for duty as a cadet at the U.S. Military, Air Force, and Coast Guard academies, as a midshipman at the U.S. Naval Academy, or in ROTC; and
- pay for duty for serving in the U.S. Armed Forces Reserves or a National Guard unit, including a National Guard unit of another state.
