How do I Deduct the Military Spouse's Income on the Indiana Return?

According to Indiana Information Bulletin #27, the spouse of an armed forces member may be exempt from Indiana income taxation on Indiana-source earned income if all the following conditions are met:

1. The spouse is domiciled in a state other than Indiana.
2. The spouse is in Indiana solely to live with the armed forces member.
3. The armed forces member is present in Indiana under military orders.
4. The spouse elects to use the same domicile as the service member under the Servicemembers Civil Relief Act (50 U.S.C. § 4001).

To claim exemption from Indiana withholding:

• File Form WH-4MIL with your employer if you qualify.

To claim a refund of Indiana taxes withheld:

1. In the State Section, choose Nonresident Indiana Return.
2. Under County Information, select Out of State for both taxpayer and spouse.
3. Continue to Subtractions From Income.
4. Select “Yes” for Military Spouse Earned Income Deduction to complete Form IN-2058SP.
5. Attach Form IN-2058SP and a copy of the servicemember’s W-2 to your return. These forms are not included in the printed return and must be completed manually.

Form IN-2058SP and copies of the servicemember's W-2 must accompany the return to claim the refund. These are not included in the printed return and must be completed manually.

Military Spouse income may be taxable on your state return where you file as a resident.