@GaryJay1
I'll give this a shot, but I don't know all the details of the CA tax forms. There are a few CA experts out there, but they may not be seeing this yet (or will respond right as I'm typing this). I do know some CA details.
1) On the Personal Info page, you indicate their state of residence as CA, no matter where they are posted. Their SLR is used as their state of residence throughout his time in the military...unless he changes it legally on special forms (DD2058). The mailing address can be HI....it's just the details when you edit their names tha sets it.Most service people do not change their SLR unless they get posted to a non-income-taxing state...but that also may depend on how long they plan to stay in service....though some never change it.
He will owe HI nothing, unless he takes an off-duty side-civilian job while stationed there....and then only as a non-resident.
2) Correct, CA does not tax their Military service people during the time they are posted out of the state of CA. Thus, this year, the income while out-of CA is treated as-if he was a non-resident...even though he is.
And yes, next year none would be CA-taxed. The software should ask where he was posted, and then the software would switch his CA tax return to a CA non-resident form.
3) Since they are both CA residents (up in #1), HI doesn't tax his military wages, nor her W-2 income if she works a W-2 job there...nor any of their interest, dividend income investment income. What HI can tax while posted there is a) His W-2 civilian job income if he works off-duty (as I already indicated),,,,b) any self-employment income (Cash, 1099-NEC) either of them may take on while in HI c) If they acquire a property in HI, and rent it out to others, the income from that would be HI-taxable.
IF his wife decides to work a W-2 job in HI, I'm not conversant as to whether CA taxes that income of hers or not. Some states do so for the civilian spouse, even if posted out of their home state, others do not.
____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*
