Is my military income taxable to California?

According to the California Instruction Booklet: 

If you are a resident of California – Military members that are residents of California must include their military pay in their total income. If you file a joint return for federal filing purposes, you may file the California return separately if either spouse was active duty during the year. 

• Military personnel who are residents of California and stationed in California must claim the active duty pay as California source income.

If you are a resident of California stationed outside of California, you are considered a nonresident for tax purposes.  File a nonresident return and exclude the active duty military pay by following the steps below in the program:  

1. State Section
2. Nonresident CA return
3. Subtractions From Income 
4. Military Pay Adjustments
5. Active Duty Military Income included on Federal W-2 CA State Wages from CA Residents stationed outside of CA all year
6. Enter amount of Military Income earned while stationed outside of CA all year
7. Continue > click until you Exit California return

See Publication 1032 for a full list of filing scenarios and instructions. 

If you are a nonresident of California – California military members that leave California under orders become nonresidents for income tax purposes.  Any income earned or received before leaving California is considered California source income and is taxable on the CA return. 

To subtract the military pay from your taxable income, follow this steps in the program:  

1. State Section
2. Nonresident CA return
3. Subtractions From Income 
4. Military Pay Adjustments
5. Military Pay Domiciled outside California > enter only military pay earned outside California, for the period you were not in California
6. Continue > click until you Exit California Return

If you are a nonresident of California stationed in California, follow these steps in the program:

1. State Section
2. Nonresident Return
3. Subtractions from Income
4. Enter eligible military income included on Federal W-2 CA State Wages. This entry puts MPA (Military Pay Adjustment) next to the entry on Part II Line 1a of Form CA (540NR) Adjustments.
5. Continue > click until you Exit California Return

If one spouse is a resident of California and the other is not, you may file separate state returns. To do this within your account, you can file the federal return and wait for the return to be accepted. Then, change the filing status for the primary taxpayer and file a separate return for the first spouse. The second spouse will need to create a new account and file a separate return in that account. 

If one spouse is a resident of California and the other is not and you file a joint return, file a nonresident return. You will need to allocate the income taxable to California on the tax return. 

Still Not Sure? - We recommend you review FTB Publication 1032 to find your specific situation.

* Note: If you file a joint tax return for federal purposes, you may file separately for California if either spouse was:

• An active member of the United States armed forces or any auxiliary military branch.
• A nonresident for the entire taxable year who had no income from a California source.

Visit California Military Spouses Residency Relief Act for filing information.