AZ Air National Guard state tax

[Austinle]

Per the state of Arizona it states I do not have to pay state tax for monthly drills (2 days a month) and it reflects on my W2. How am I able to have it reflect on my taxes when I am filing them?   I am still showing as if I have to pay state tax. Someone please help 

[AmyC]

You are correct, Taxpayers in the Military -- Update. If you are sure the program is taxing that AZ money, you can subtract it out. Follow these steps:

1. Continue through AZ until you see Any Other Addition Adjustments?
2. Click NO
3. Screen Any Other Subtraction Adjustments?
4. Click YES
5. Enter the description and amount
6. Click Continue

[Austinle]

Is there a way to tell how much it’s taxing? Because I’m filing married joint. Both my wife and I are military 

[BillM223]

"it reflects on my W2. " How does it "reflect" on your W-2? Do you mean that the pay for those days of drill are included in Box 1 (Wages) on your W-2? Or do you mean that that pay is not in box 1? Or do you mean that there is some other entry on the W-2 that refers to this drill income?

If you need to make an adjustment as Amy described, you don't need to know how much tax you are paying for those drill days, you just need to remove the income of the drill days from state income so that it won't be taxed.

As for knowing how much income you are talking about, I believe that you will have to talk to a payroll specialist where you work, because we don't have nearly enough information to know what you were paid for the drill days.

[Austinle]

When I enter all my information on my W-2 for the drills and submit it. The amount of my state tax I owe goes up. So if My wife and I don’t owe taxes on military shouldn’t it not go up? 

And On my W-2 there is no amount for state tax that was taken from my pay if that makes sense 

[BillM223]

So the W-2 has only your pay for the drills?

Are these drills considered "active duty"? If so, when you enter your Personal Info or My Info about the two of you, did you indicate that you were military?

That will trigger an additional box to check on the screen after the W-2, which asks if "any of these uncommon situations apply to you?" If the drills are considered active duty, then check the first box.

Then go back to the Arizona interview. There will be a screen (eventually as you move through) that reads "Your military pay subtraction", confirming that this W-2 amount is not included in your state income (so is tax-free).

However, if the drill pay is not considered active duty or if the W-2 contains pay for more than just the drills, you will have to do what Amy said above - add an Other Subtractions with the description something like "Tax-free drill income" and the dollar amount of the income just from the drill, to remove it from your Arizona income.

And thanks to both of you for your service!

[Austinle]

When I enter my information for drill it is still adding about $151 for state tax. I already enter all of my other W-2’s prior to this as well.   Not sure where this extra state tax is coming from 

[BillM223]

"On my W-2 there is no amount for state tax that was taken from my pay if that makes sense "

If the W-2 was for only $151 and this was all drill pay, then it makes sense that no state withholding was made (since it is not taxable).

And you are saying that you did mark this W-2 as active duty military pay on the screen after the W-2 entry.

Did you also see the screen near the beginning of the Arizona interview with the heading "Your Military Pay Subtraction" saying that the $151 won;t be taxed in Arizona? I am guessing not, so I have to believe that you didn't persuade TurboTax that that W-2 was actually military pay.

Go back to the W-2 data entry screen, delete the W-2, and re-add it, making very sure to check the military pay on the next screen "any of these uncommon situations apply to you?"

And if you don;t see this option on the screen after the W-2, then go back to My Info or Personal Info and check that you were active duty. This is a requirement to get this military pay option after the W-2.