Illinois Schedule M line 21 military pay issue

[Tromp80]

I was active duty at the beginning of the year. Now I am retired. I am trying to file my Illinois state taxes and the form is giving me an error. The schedule m line 21 form states military pay should be zero. Please explain why. It’s not zero. I spent the last 3 hours trying to figure out what the issue is. 

[DawnC]

Go back through your Illinois state return.   You will come to a screen that says How Illinois treats income differently.   Click Edit next to Military income and make the adjustment on that screen.   

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.

[Tromp80]

So the amount should be zero? In the past years of filing  I have filed and the schedule m form was filled out even if the income is exempt. If I put zero then it will not match with my federal income tax. Shouldn’t the IL schedule m form automatically subtract the amount because I did state it was military income. My home of record while I was active duty was WA. 

[SteamTrain]

Don't know the final answer.....BUT...Another place you might need to check.

Go back to the Federal section and EDIT that W-2 form.

On the page AFTER the main form with all it's boxes...is a page full of checkboxes. In the middle of all those checkboxes is one where you indicate that the W-2 for your Military service.  That must be checked. Then continue out to the main menu, before going back to the IL Q&A.

[Pcarbajal929]

I have the same issue, have you found a solution?

[DaveF1006]

It depends. Normally you would only have an obligation to file a state return in your Home of Record State. If you have other income however in the State of Illinois, you would nee to file an Illinois non-resident return or if your military pay had Illinois withholding tax withheld, you would file an Illinois non-resident return to receive your Illinois withholding refunded back to you.

Now to exclude your military pay. It depends on how you recorded the W2. After you entered your W2, there is a screen that says Let's check for uncommon situations. Here you check the Box that says Active Military Duty.  

Now as you prepare your Illinois state return, there should be an income allocation screen for your W2 income that appear as you navigate through the return. Here you would exclude your military pay and report income remaining earned elsewhere. If this is all military pay, put a zero. Now, you should see a total subtraction of your military pay in Box 41 of your schedule M. Also you should see military pay being excluded in Box 21 of Schedule M.

Check over your answers in the MY INFO section of your return. First of all, be sure to indicate you are active duty military. Be sure to enter the Home of Record state as your resident state and Illinois will be reported as the State where you are stationed. This will indicate that Illinois is a non-resident state to you for income tax reporting purposes.

[amh0523]

Delete the State Return. Start over fresh. The Error still there. 

The Military's indicator is check after the W2 has been entered, the box is saying income shouldn't be there, but the income amount should be there to be subtracted/ excluded. 

The return needs to be mailed off, best solution for getting return to the IRS, whereas the efile will not go through with error lingering. 

[DMarkM1]

You are correct the Schedule M should show your military pay that is subtracted out. Typically, this experience is resolved by returning the to "My Info" section and "Edit" the military spouse's info.  Actually click "No" and then "Yes" for the "Military" question.  Go through the "Military" questions there again.  Since you were active duty at some point in 2023 and received active duty pay indicate "Active Duty" and "Left the military in 2023".      

Be sure to click "Continue" when done to trigger the updated answers. 

This should now allow the non-taxable active duty pay and still allow the exclusion of military retirement 1099R pay if applicable as well for IL. 

@amh0523     

[RockyRed]

I had this exact same issue. What ended up working for me, was to go back to the military member on the "personal info" page and "edit" them. Remove them as active duty. Click "continue" at the bottom to save it. Then, go back and edit them again, adding back that they ARE military and finishing filling out that page. Click "continue" to save it. Now go back to the home page and "review" the Illinois state tax portion again. This time, it doesn't bring up the error! 🙌 Hope this helps anyone who lands on this page, in search of the same answer! Turbo tax needs to fix this issue!