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Military Income Taxes

Level 1

My client is in the service. He is domiciled in California, but stationed in Montana. His spouse who is non-military lives with him in Montana. Their only income is W-2 income. He receives a W-2 with the state of California listed on the W-2.  She receives a W-2 with the state  of Montana listed as the state.  I believe that I need to file them as California non-resident, taxing only his military income. I am allowing her state of domicile to follow his, as they were married when they left California and were stationed in Montana. I am not sure if she would file a Montana non-resident listing only her income.  When I put the details into the input sheets, it is taxing both W-2's on the Montana return. California is taxing only her income, so I have something off. I am a little lost here as to how to proceed.

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3 Comments 3
Level 15

@DONALDDUCK You should post your question in the 



area - You posted in the area telling what product improvements you want. 

Maybe this article will help.  



Here's wishing you many Happy Returns
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Level 15

If you read the MT 2 form booklet, page i, you will see there is a new box to check. Read down to page 1, to the Nonresident Military Servicemembers and Spouses section. It mentions if they are both residents of the same State (CA), which I think you have this condition.


There is a list, by year.

"Level Up" is a gaming function, not a real life function.
Level 1

Per updates to the SCRA pertaining to the MSRRA in 2018, the non-military spouse can claim the same residence state as the service member. So if his residence is CA, she can claim that to. You would actually be filing as a nonresident in both states. CA only considers you a resident if you're stationed there AND it's your legal residence. So you would file both of their income to CA. And you would file as a nonresident in Montana. She should get all of her state taxes back that were paid to MT.

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