Active duty military income earned outside
of Pennsylvania by a PA resident is not subject to state income tax.
In TurboTax, to make sure the exemption goes through correctly
on your PA return you need to first code your W-2 as active duty wages
in the Federal portion and, second, mark your active duty wages as not
taxable on the PA return. Here's how you do this:
Federal:
Ensure military W-2 is indicated as active duty income:
- Once in your
return, click on Federal Taxes tab and choose Wages & Income
- Click Edit next
to your military W-2
- Click Continue on
the W-2 entry screen to get to the screen titled "Do any of
these uncommon situations apply to this W-2?
- Click the box
to the left of Active duty military (see screen shot below)
Pennsylvania:
You are considered a resident if your legal state of residence
on your LES is PA. Only
your military pay earned while stationed outside of PA is exempt from state
taxes. All other income IS taxable by Pennsylvania and the state
requires a return if your taxable income is greater than $33
In the state section of TurboTax, when you come to the page
titled “Compensation Summary”, click edit beside
your military income. The Verify This Income screen
states that active duty military pay is not taxable in PA. Click box to
left of Entire amount of this income is not taxable in PA. (*If
you have already run through the PA return, when you get to this screen you may
only see a box next to Make this income taxable in PA. - this
box should NOT be checked.) (see
screen shots below)
Note: Any interest, dividends, capital gains, rental income,
etc. IS taxable by PA regardless of where you are stationed.
If you are filing electronically you must either fax or mail
copies of your W-2 and military orders to:
Fax: 717-772-4193 or 717-787-2840
Use the Personal Income Tax Fax Cover Sheet DEX-93 to
assist in timely posting of any information to your return.
Mail to:
PA Department of Revenue
Electronic Filing Section
P.O. Box 280507
Harrisburg, PA 17128-0507
Please make sure your Social Security number is on your orders.
