Whether your military income is taxable to Rhode Island depends on your residency status.
According to Rhode Island tax rules, active duty military pay is generally taxable only by your state of legal residence (domicile).
Rhode Island Residents
If you're a Rhode Island resident, Rhode Island taxes all of your income regardless of where it was earned. This includes military pay and income from sources both inside and outside Rhode Island.
Rhode Island Nonresidents
If you're a nonresident of Rhode Island, your active duty military pay earned while stationed in Rhode Island is not taxable to Rhode Island.
However, other income earned in Rhode Island while you're stationed there, such as wages from a second job or certain business income, may be taxable to Rhode Island and also reportable to your resident state.
How to Enter the Active Duty Military Pay Subtraction
If you're filing a Rhode Island nonresident return and qualify to subtract active duty military pay, follow these steps in the program:
- Go to State Section.
- Select Nonresident Rhode Island Return.
- Basic Information.
- Enter your city or town of legal residence.
- Answer Do you have income from outside of Rhode Island? and continue.
- Go to Subtractions From Income.
- Enter amount under Active Duty Military Pay of Nonresidents and Income From RI for Service Member's Spouse.
Married Couples With Different Residency Status
If one spouse is a Rhode Island resident and the other spouse is not, separate Rhode Island returns are required.
If you filed a joint federal return:
- The Rhode Island resident spouse must calculate income, exemptions, and tax as though a separate federal return had been filed.
- The nonresident spouse may need to file a separate Rhode Island nonresident return if they have a Rhode Island filing requirement.
Within the program:
- Complete and file the federal return first.
- Wait until the federal return is accepted.
- Change the filing status to Married Filing Separately.
- Prepare and file the Rhode Island return for the resident spouse.
- The nonresident spouse must create a separate account to prepare and file a Rhode Island nonresident return, if required.
Military Spouse Relief Act
Special rules may apply to spouses of military service members under the Military Spouse Relief Act. These provisions can affect residency and state income tax obligations, so review your situation carefully when preparing your return.