Illinois taxes for military

[wonderlust2017]

Do active duty military pay Illinois state taxes

[DanaB · Accepted solution]

If you are an Illinois resident you may subtract tax-exempt military pay (pay for duty in the armed forces, including basic training) that is in your Adjusted Gross Income (AGI). Other income may still be taxable.

Please see Illinois Filing Requirements for Military Personnel additional information.

[Mtthornton88]

HELP!  I have military pay from the Guard and live in Illinois.  The W-2 is entered, and military information provided for federal return.  TurboTax transferred all the data to file my state return; however, the computer system has “determined” I am not eligible for the military pay exclusion,  which is WRONG ( and stated here).  How do I override your system to get it deducted from my Illinois return?????

[AHofferkamp]

My brother is having the same problem! My brother and I are both in the Illinois Air National Guard. Turbotax recognized that I do not have to pay state taxes on military income, but won't recognize it for my brother. They want him to pay!  I cannot find any differences between how our w-2's were entered.  

How does my brother over-ride the system?

[Mtthornton88]

I found the workaround for that one.   You have to go to his guard w-2.  Click edit.  Go through all prompt until you get to the screen that says “ uncommon situations”. Click “active duty”.  Then, and only then, does the TurboTax  Illinois form recognize it as military pay.  But, if you have to file in other states (my husband works in MO), finish that form before doing that.  Otherwise, the MO form wants to process a credit for military too. Turbo Tax has a lot of work to do on their program functionality.  

[JoannaB2]

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.