Does Turbo Tax support selecting Veterans Benefits and Transition Act of 2018 on a State return?

[DanielV01]

Not directly, but you are allowed to claim it.  I'll give an example of how, even though I don't know what the states are (I don't have access to your file in this public forum).

Let's say the active duty spouse has an SLR of Texas and the Military Spouse was from Missouri, and that's where you are stationed.  The Military spouse has never established residency in Texas.  Prior to 2018, the military spouse (non-active duty) would have been required to pay tax to Missouri on his/her income.  However, because of the Veterans Benefits and Transitions Act of 2018, that non active-duty spouse may now claim the same state of residency for 2018 as the active-duty spouse, Texas, which has no state tax.

Since MO tax was withheld, it will be necessary to file a MO nonresident return with zero income.  Do not e-file the return.  Rather, mail in the return with the following written at the top:  Per the Veterans Benefits and Transitions Act of 2018, I elect Texas as my state of residency.  The income tax withheld by MO by law must be refunded.

[nduck88]

We are stationed in California and per the state of California website "If the spouse makes the election, write “VBTA” at the top of the tax return in RED INK, or include it according to the software’s instructions." So California accepts e-filing with VBTA, it just seems like TurboTax needs to make that an option in the software.

[DanielV01]

Unless there is something specific in the software that allows for the election, you will need to use the mail-in instructions and write VBTA in red ink.  It is nice that California has that provision, because it came so late in the year that many states are still adapting to it.