According to Information Bulletin #27, "The spouse of an armed forces member is exempt from Indiana income taxation on Indiana source earned income when:
- The spouse currently is domiciled in a state other than Indiana;
- The spouse resides in Indiana solely to live with the armed forces member;
- The armed forces member is present in Indiana in compliance with military orders; and
- The spouse and the armed forces member both are able to claim the same domicile."
To claim tax-exempt from Indiana withholdings:
Form WH-4MIL can be filed if you qualify to exempt your military spouse income from your Indiana return. Your state earnings are still taxable on your state resident return.
To claim a refund of taxes withheld from your Indiana income, follow these steps in the program:
- Edit Nonresident Indiana Return
- County Information
- Select Out of State for the taxpayer and spouse when choosing where you lived and worked during the tax year
- Subtractions From Income
- Military Spouse Earned Income Deduction,
- Select "Yes" to complete the IN-2058SP in the program
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.