According to the Massachusetts Filing Instructions, all Massachusetts income should be reported on the Massachusetts return.
If you are a resident of Massachusetts, your military income is taxable in Massachusetts regardless of where it was earned.
If you are a nonresident of Massachusetts, stationed in Massachusetts, your military income is not taxable on your Nonresident Massachusetts return.
The military income is automatically deducted from the return if the military servicemembers correct Home of Record is listed on the W-2 Form. Please check your W-2, lines 15-16 to ensure Massachusetts is not selected.
If the Servicemember and spouse have a different residency status for Massachusetts, file separate state returns.
Military Pension Exclusion:
Certain pension income is excluded from Massachusetts tax. These include:
- Pension income from a contributory annuity, pension, endowment, or retirement fund of the United States
- Noncontributory pension income received from the US uniformed services
- Survivorship benefits received from the US uniformed services
The pension income is not taxable to Massachusetts and should not have been pulled to line 6 of Form 1-NR/PY. If it is included in the taxable income, you can claim the exemption for the pension income, by performing the following steps in the program:
- State Section
- Massachusetts Return
- Enter the deductible amount of qualified contributory pension income from another state or political subdivision included in income
- Enter qualified amount in the box
For additional information:
Military Spouse Filing Instructions
Instructions for the Massachusetts Income Tax Form 1.