According to the Rhode Island Instructions, active duty pay for members of the armed services is subject to tax only in their resident state.
If you are a resident of Rhode Island, all income is taxed regardless of where it was earned or the source.
If you are a nonresident of Rhode Island, active duty pay earned while stationed in Rhode Island is not taxable. Other income earned while stationed in Rhode Island is taxable to Rhode Island (and your resident state).
To enter the active duty pay subtraction into your account, follow these steps in the program:
- State Section
- Nonresident Rhode Island Return
- Basic Information
- Enter your city or town of legal residence
- Do you have income from outside of Rhode Island?
- Subtractions From Income
- Active Duty Military Pay of Nonresidents
- Income From RI for Service Members Spouse
- Save
If one spouse is a resident of Rhode Island and the other is not, file separate returns for Rhode Island. If a joint federal return was filed, the resident spouse must compute income, exemptions and tax as if a separate return had been filed.
Within the program, file the federal return first and wait for the return to be accepted. Then, change the filing status to married filing separate and create the state return. File the state return for the resident spouse. The other spouse will need to create a separate account in the program to file a nonresident RI return (if required to file).