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s-ibarra736
New Member

If I’m active military and my wife and I are both residents of Michigan, and she earned income in NC, does she have to file MI state taxes? And would she owe MI money?

 
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DS30
New Member

If I’m active military and my wife and I are both residents of Michigan, and she earned income in NC, does she have to file MI state taxes? And would she owe MI money?

Yes - If she is covered under MSRRA , she will only file taxes in your state of legal residency (SLR) which is MI. If her earnings are not military pay, then her income would not qualify for any type of military exemption and she may owe taxes in MI on her NC-sourced income. 

Just make sure that you are letting the TurboTax system know that you are on active military duty and that you are inputting your state of legal residency (SLR) as your resident state. Your SLR is usually your home of record – the state recorded by the military as your home when you joined the military (regardless of where you are stationed).

For example if your SLR is MI but you are stationed in NC, then you will use MI as our resident state in TurboTax.

You may need to edit your personal information under the Personal Info tab (for TurboTax Online sign-in, click Here) to let the TurboTax system know that you are in the U.S. Armed Forces.

You will need to make sure that you select yes -"I am a member or former member of the U.S. Armed Forces (active, reserve or National Guard)".

Also answer "no" to "I lived in another state" (screenshot). Even though you may have lived in a different state, this will not apply if you are on active military service in a state other than your home of record state.

If NC withholding were taken out of her pay in error -

In order to get the full refund of her NC state income tax withholdings, she will need to file a nonresident NC return but report zero "0" income from VA (even though she does have NC wage income). She must mail in this NC nonresident state income tax return and include her state W-2 information. She will want to include an explanatory statement with her NC return stating her situation (that her NC employer withheld NC state income taxes from her wages in error because she is a military spouse and covered under MSRRA).

You can add a state under the state taxes tab in TurboTax.


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1 Reply
DS30
New Member

If I’m active military and my wife and I are both residents of Michigan, and she earned income in NC, does she have to file MI state taxes? And would she owe MI money?

Yes - If she is covered under MSRRA , she will only file taxes in your state of legal residency (SLR) which is MI. If her earnings are not military pay, then her income would not qualify for any type of military exemption and she may owe taxes in MI on her NC-sourced income. 

Just make sure that you are letting the TurboTax system know that you are on active military duty and that you are inputting your state of legal residency (SLR) as your resident state. Your SLR is usually your home of record – the state recorded by the military as your home when you joined the military (regardless of where you are stationed).

For example if your SLR is MI but you are stationed in NC, then you will use MI as our resident state in TurboTax.

You may need to edit your personal information under the Personal Info tab (for TurboTax Online sign-in, click Here) to let the TurboTax system know that you are in the U.S. Armed Forces.

You will need to make sure that you select yes -"I am a member or former member of the U.S. Armed Forces (active, reserve or National Guard)".

Also answer "no" to "I lived in another state" (screenshot). Even though you may have lived in a different state, this will not apply if you are on active military service in a state other than your home of record state.

If NC withholding were taken out of her pay in error -

In order to get the full refund of her NC state income tax withholdings, she will need to file a nonresident NC return but report zero "0" income from VA (even though she does have NC wage income). She must mail in this NC nonresident state income tax return and include her state W-2 information. She will want to include an explanatory statement with her NC return stating her situation (that her NC employer withheld NC state income taxes from her wages in error because she is a military spouse and covered under MSRRA).

You can add a state under the state taxes tab in TurboTax.


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