topic Active Duty Military - New York State Tax Exempt in State tax filing

Active Duty Military - New York State Tax Exempt

macmisty — Sun, 26 Jan 2025 02:21:31 GMT

I am active duty military, entering into the military as a NY resident, stationed currently in Virginia. I have met the criteria to claim NY non-resident and submit the IT-203, IT-225 & IT-2. My W2 has NY State allocated with NY income tax withheld. For over ten years I have mailed paper filed and it took forever to get back my return. I have paper filed because each time I attempt to submit NY state electronically through Turbo-tax I get a warning that states: Allocation Worksheet for PY?NR: Wages Salaries, Etc, Col D New York wages were reported on federal form W-2 but no wage income has been allocated to New York. This will cause the efiled return to be rejected by New York State."

When I go to the form, it opens IP the PY/NR Allocation Worksheet, if I don't place $0 in column D in wages the program only offers a partial return.

Background use with Turbotax:

I normally e-file federal joint with my spouse, then break up the states separately (Joint filing separately) and allocate all of the children and deductions with my spouse to keep NY non-resident simple and just focused on my military pay.

What am I doing wrong as I am hoping to start filing NY state via Turbo Tax for this year and the future to get all of my income tax withheld returned in a timely manner?

Re: Active Duty Military - New York State Tax Exempt

DaveF1006 — Tue, 28 Jan 2025 18:38:56 GMT

It depends. Since you entered New York State as your Home of Record state, this is your resident state. All of your military income will be allocated to the state of New York as the state of Virginia is a non-resident state to you for income tax purposes. Your wife however can choose her state of residence whether it be Virginia or NYS. All of her income will be reported as a Virginia resident if she hasn't formally declared NYS as her resident state. This privilege is awarded to her under the Military Spouse Residency Relief Act.

If you wish to change your State of Legal Residence (SLR), you need to submit form DD Form 258 to your local finance officer to change from NY to Virginia. You may wish however to delay this choice unless Virginia is your permanent duty station.

let us know if this addresses your specific concern.

What is my Military State of Residence

Re: Active Duty Military - New York State Tax Exempt

macmisty — Tue, 28 Jan 2025 20:45:20 GMT

While I appreciate your reply, that is information I am aware of. My question was specific to why I get the error and how the forms should be completed in Turbo Tax so that NY State will get an electronic tax package to issue a total refund. For more than two decades I have been filing via a manual entry process and snail mail, because Turbo Tax does not populate the forms correctly.

Re: Active Duty Military - New York State Tax Exempt

DaveF1006 — Wed, 29 Jan 2025 18:12:20 GMT

According to NYS Military and Veteran Benefits, you may exclude your military pay under these conditions:

Resident service member stationed and living outside New York:

Did not maintain a permanent residence in New York State during the tax year, and
Maintained a permanent residence outside New York State during the entire tax year, and
Spent 30 days or less in New York State during the tax year

Now how to exclude your NYS military pay from the return in Turbo Tax if you fit the conditions listed above

Select State tab. Select NYS
The first screen will suggest you file as a resident. Here select change residency and declare yourself a non-resident
Answer the questions until the reach a screen that says New York Income Allocation. If it asks if your income was earned in NYS, say no.
Now it will give you a summary of all your W2's. Here you will select edit next to your military pay or for all other W2's entered in your return.
Next you should see a screen that is labeled Allocate Wages to New York
Here select Allocate by percentage Record a 0 in this box.
Now you should have a NYS that refunds your entire state withholding for 2024 as your entire military pay is excluded

Caution. Do not try to enter this information on the form itself. Use the procedure exactly the way it is outlined and you should have a tax return that can be electronically filed.

Re: Active Duty Military - New York State Tax Exempt

ericcerissa — Mon, 10 Feb 2025 00:50:35 GMT

I’m in the military and same situation too where I’m stationed in Virginia but from NY. Those instructions provided still don’t solve the problem. The instructions get you to zero, but when you actually file a few steps afterwards, TurboTax won’t accept it and kicks it back, taking you to “income” where you put the zero because the system sees it as an error. As a result, like the original question, I always have to print off a copy and mail it in. Please address this with the software so military from NY can do e-files and not resort to snail mail.

Re: Active Duty Military - New York State Tax Exempt

SusanY1 — Sat, 22 Feb 2025 00:28:06 GMT

Sometimes, the TurboTax programs (or the taxing authorities accepting them) don't like 0s at all. Try following the instructions above but instead of allocating $0, allocate $1. This may resolve the e-file issue for you and allow you to proceed. The $1 entry will not materially affect your return.