My husband is Military and in previous years was exempt from paying Kentucky state tax. Its not allowing us to do that this year?

[DanielV01]

Kentucky still exempts military pay.  See this excerpt taken from the KY Tax Instruction Booklet:  Military Personnel—MILITARY PAY EXCLUSION—Effective for taxable years beginning on or after January 1, 2010, all military pay received by active duty members of the Armed Forces of the United States, members of reserve components of the Armed Forces of the United States, and members of the National Guard will be exempt from Kentucky income tax. KRS 141.010(10)(u) (Italics and bold added)

To make sure this is calculated correctly in TurboTax, make sure of the following entries:

If you are stationed outside of Kentucky, make sure you answer no to the questions if you live or work in a state outside of Kentucky.  Then double-check these W-2 entries:

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.  Your military pay will be correctly processed for your state of record.  (Screenshot at end of answer)

You should see the military pay excluded from Kentucky income.