I am an Indiana Resident trying to apply my State Military Tax exemption, and the TurboTax software will not let me apply. Any resolutions?

[ericparrish93]

I am unable to apply the military deduction that should be present on my IT-40 block 11. Suspecting this is a software issue.

[ThomasM125]

It is possible that you are trying to go by the new rules applicable to the 2024 tax year, not 2023. Per the following from the Indiana Department of Revenue, your military pay is taxable in Indiana if you are a resident of the state in 2023. In 2024, it would not be taxable:

Here is a link to the article:  Indiana military resident tax issues  

[ericparrish93]

@ThomasM125 correct, that would be for active duty members not taking effect until 2024.

However, for National Guard and Reserve personnel to include MILTECHs, it applies for the current tax year in the next paragraph of the referenced article.

[LindaS5247]

Make sure that you have indicated that you are active-duty military in order to trigger the state return to apply deduction. 

There are two places where you indicate that you are on military active duty: 

• The first is in the "My Info" section after you enter your name and occupation. You can click on "My Info" on the left and then click on "Edit" next to your name.
•  The second is on the "Do any of these uncommon situations apply to this W-2?" screen, right after you enter your W-2, you can check the active-duty military box for the W-2.

During the State interview, you should see  "Here's the income that Indiana handles differently" screen. Click on "Start" to answer questions then you should be able to qualify for the deduction.

You can also get to that section of your return as follows:

You can enter your military status by following these steps in TurboTax Online:

• Log into your Turbo Tax Online account.
• Select "Take me to my return"
• Click "My Info" located on the left side of your screen
• Click "Edit" next to your name
• Underneath your "occupation", you should answer "Yes or No" to the question "I am a member or former member of the U.S. Armed Forces (active, reserve or National Guard)"
• Scroll down and click "Continue" 
• If you choose "Yes", TurboTax will ask you a few questions regarding your military status
   

[WheelerKayden]

For anyone that comes looking here to solve this issue for any pre-2024 or "odd" tax situations regarding military pay, this may help. 

I have been racking my brain trying to figure this all out. But the "Military Service Deduction" for active duty service was not applying, due to an oversight on my part and poor wording on the main pages for Indiana's "residency" and "employment." Read the fine print carefully. If you were stationed in another state and your spouse was with you, but IN was your home of record? Put the "out of state" option in the dropdown that applies to you. This fixed it for me 🙂