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How to correctly show proper State of Residence for active duty Military?

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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DanielV01
Expert Alumni

How to correctly show proper State of Residence for active duty Military?

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:  

  1. Sign in to TurboTax Online, click take me to my return, then pick up where I left off.
  2. Click on Wages and Income, then Edit on your W-2
  3. Scroll through the screens until Do any of these uncommon situations apply?  Make sure the Active Military Box is checked.  (See screenshot below)

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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