PA non taxable active military pay for resident stationed outside of PA

[RichBKEA]

How do I get ProConnect to omit the non-taxable wages of a PA resident stationed outside of PA? The  active military box on the Wage screen doesnt apply to PA.  Any help would be greatly appreciated.

[itonewbie]

No, you don't report the income on the PA return, if your client qualifies.  Reading instructions from the DOR always helps whenever you have state-related questions.  See these links for the details:

https://revenue-pa.custhelp.com/app/answers/detail/a_id/266/~/should-i-report-my-active-military-pay...

https://revenue-pa.custhelp.com/app/answers/detail/a_id/564/~/i-am-a-pa-resident%2C-on-military-acti...

[RichBKEA]

I am aware and understand that it doesnt get reported on the PA return. However my question is in regards to how to get ProConnect to exclude it from PA income, while still including it in federal. There is a box under Local Income Tax Withheld to indicate Active Duty Military. However it lists the states in which it is applicable and PA isnt one of them. I have also tried to override the compensation on the Pennsylvania  Income scree, but was unsuccessful there in getting PA income to zero out.

[itonewbie]

For PA, there is no specific input for active military pay.  It does make sense to have an input but I suppose Intuit figured that there should be no such input since there is not a line item for that in the form instructions.

The way to overcome that would be to override state wages as $0, as you had attempted to do.  The proper way to do that in PTO would be to enter -1 (yes, negative 1) on (16) State wages, if different on the same screen where you input all the W-2 info.

I have tested that myself for PA and see that this will work.  It also will not trigger any critical diagnostic.

[TaxGuy21]

Great convo,

Now what would be the case in a Part year residency as it will generate an error prompting a state said income was made in .

Thanks in advanced

[Pepper2]

If you just input a zero wage and override state it will make the PA Sch W-2/MC incorrect. However, I have found that if you go to screen 55.052 and select any Active Duty wages earned out of state it will include the wages on the form and does not include them from line one of the PA-40.  Lacerte will not populate the associated forms Sch NRH and Sch UE, which is where the adjustment is made as they zero out. I believe these are not necessary as the wages generally equal zero. In order to file though, you should attach a copy of the active duty orders. 

[godiva_jen]

Little late to the party, but I'm in 2021 and selecting "Active duty military pay" appears to be fixed for excluding from PA gross income.