My husband is active duty military. We are currently stationed in NC. We live in and I work for a NC company. However our home of record is Alabama. How do I file state?

[kprince0712]

I made zero income with Alabama.

[SteamTrain]

@kprince0712 

1)  If you filed the proper forms with the NC company to NOT have NC taxes withheld (The NC4-EZ), you and your military husband only have to file an AL resident tax return.  AL taxes all income of their Military HOR couples, no matter where posted...thus your NC wages are taxable by AL.....and you may owe AL more than what was withheld from your Husband's military W-2.  But, then, you didn't have to pay NC anything and you aren't stuck with filing two different state tax returns.

2)  On the other hand, if you had NC taxes withheld, then you will have to file both an AL resident tax return, AND an NC Nonresident tax return, indicating that ALL of the NC W-2 is NOT subject to NC taxes, and get that NC withholding back.

Situation number 2 ends up requiring you to file two state tax returns. 

BUT getting the form NC4-EZ submitted to the employer every year by January will stop all NC withholding.

Employee's Withholding Allowance Certificate NC-4EZ | NCDOR

______________________________________________________

AL Legislators/Governor just signed a bill taht back-applied to their 2021 taxes.....it may take a month or more for the software to catch up to that change...you may have to wait until early April to file the AL state tax forms.

[TeresaM]

Because your husband is active military, you and he both can claim a home of record, even if you are stationed in another state. If your state home of record requires that you file a state return, that will be your resident return. If you have any withholding from pay in the resident state, you will need to file a non-resident return for that state.

You will always want to prepare the federal return, then the non-resident state return, then the resident return. This allows the information to flow so that your resident state can see the taxes in the non-resident state and avoid double taxing the same income. 

In the Personal Info section of the federal return, in the beginning, you will want to be sure that you select, Yes, for I am a member or former member of the U.S. Armed Forces (active, reserve or National Guard) and that you "made money in another state". This will prompt the right questions to set up the states properly.

Alabama does require that you file a state return if it is your home of record. "Military Personnel (Residents). Military personnel, whose legal residence is Alabama, are subject to Alabama income tax on all income regardless of the source or where earned unless specifically exempt by Alabama law."  Some states handle this differently. You may find that you want to change your home of record in the future, so this is one thing to consider.

This TurboTax Help article has additional information and links about military state income taxes. State Military Filing Rules