According to the Nebraska filing instructions, active duty pay is taxed in the state you are a legal resident.
If you are a resident of Nebraska, include all of your income on your resident return regardless of where it was earned.
If you are a nonresident of Nebraska, your active duty pay is not taxable to Nebraska although it may be taxable in your resident state. Any other income while in Nebraska that is not active duty military pay is taxable on the Nebraska return. If your only source of income is your active duty pay, you are not required to file a Nebraska nonresident return. If you are required to file a Nebraska nonresident return, your military pay will not be pulled to the Nebraska return unless Nebraska is listed on the W-2 as the home of record.
If one spouse is a Resident of Nebraska and the other is not, you may elect to file a married filing joint return where both spouses will be taxed as residents or a married filing separate return.
The married filing separate return for the resident of Nebraska can be created by following these steps in the program: going to the
- State Section
- Nebraska Resident Return
- Basic Information
- Select Active Military for the Special Filing Status
- Go to Change Filing Status from MFJ to MFS for state purposes only
- Do you want to changes the state filing status from MFJ to MFS - Select "Yes"
- MFS for State Purposes only - Complete the form for the resident of Nebraska
- Save
The nonresident of Nebraska will need to create a separate account in the program and file the nonresident state return separately.
Military Retirement:
According to the Nebraska website, "an individual who retires from the uniformed services of the U.S. on or after July 18, 2012, may make the election to exclude a portion of his or her military retirement benefit by filing an Election to Exclude Military Retirement Benefits From Nebraska Taxable Income, Form 1040N-MIL, with the Department, within two years after the retirement date. Official documentation, including information to show that the individual retired and the separation date from the military is required when filing Form 1040N-MIL."
You can enter your Military Retirement subtraction by following these steps in the program:
- State Section
- Nebraska Resident Return
- Subtractions from Income
- Military Retirement
- Military retirement, Form 1040N-MIL must be on file with the Department
- Enter amount of military retirement
- Save
For more information, see