My son is in the army and was posted to Alaska for all of 2015. For Department of Defense purposes, his official state of record is California and his paycheck reflects CA income taxes being deducted. However, as I mentioned, he earned all his military pay while in Alaska. Under the Personal Info Summary, do I list his state of residence as California or Alaska? Needless to say, if Alaska, all money taken by CA will be returned. If CA, then they keep about half of what deducted from his pay check. Thank You
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His state of residence is California. Here is an FAQ that helps explain the State Military Rules: https://ttlc.intuit.com/replies/3300147
The good news is, however, that California still will return all of the taxes paid in. This is because California had a law change in 2016 that no longer taxes military income for the California resident stationed outside of California. Please see this website: https://www.ftb.ca.gov/individuals/faq/ivr/217.shtml
Make sure that his W-2 income is marked as Active Duty by doing the following on the W-2 screen:
Also, when going through the California return, you will be asked how much of the income was earned stationed outside of California. You will put the appropriate amount (sounds like all of it).
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