How Do I Deduct the Military Spouse’s Income on a West Virginia Return?

Under the federal Servicemembers Civil Relief Act (SCRA), a military spouse's wages may be exempt from West Virginia income tax if certain requirements are met. If West Virginia tax was withheld from otherwise exempt wages, the spouse may file a West Virginia nonresident return to claim a refund. 

Who Qualifies for the Military Spouse Exemption?

A military spouse's income may be exempt from West Virginia income tax if all of the following apply:

1. The service member is in West Virginia under military orders.
2. The spouse is in West Virginia solely to be with the service member.
3. The spouse maintains legal residence (domicile) in another state. 

West Virginia follows the federal SCRA rules, which allow military families to elect a state of residence for tax purposes. If the spouse qualifies, wages earned while accompanying the service member generally are not subject to West Virginia income tax. 

How Do I Claim Exemption From West Virginia Withholding?

To stop West Virginia income tax withholding from future paychecks:

1. Complete West Virginia Form IT-104 and provide it to your employer.
2. Attach a copy of your military spouse identification card if requested.
3. Provide any additional documentation your employer may require. 

This allows your employer to stop withholding West Virginia income tax from qualifying wages.

How Do I Claim a Refund of West Virginia Tax Withheld?

If West Virginia tax was already withheld from exempt wages, you may claim a refund by filing a West Virginia nonresident return.

In the software:

1. Go to State Section.
2. Select the 3 dots to Edit the Non-Resident Return.
3. Select Subtractions From Income.
4. Choose Active Duty Military Pay.
5. Enter the qualifying military spouse wage information. 
6. Continue through the remainder of the return. 

Note: The service member should also enter qualifying military income in the same section if required. 

What Documentation Do I Need?

Include a copy of DD Form 2058 (State of Legal Residence Certificate) with the return. West Virginia's instructions state that military spouses filing as nonresidents should include DD Form 2058 and identify themselves as active military or military spouse filers. 

West Virginia specifically provides that a spouse whose wages are exempt under SCRA and who had West Virginia tax withheld should file a nonresident return and include the DD-2058 showing the elected state of residence. 

Do I Need to File a West Virginia Return?

If all of your income is exempt military spouse wage income and no West Virginia tax was withheld, you generally may not need to file a West Virginia return. However, if West Virginia tax was withheld and you want a refund, you must file a West Virginia nonresident return to claim it. 

Will the Income Be Taxable Somewhere Else?

Usually, yes. Although the wages may be exempt from West Virginia tax, the income may still be taxable in the state where you are considered a resident. You should report the income according to the rules of your legal state of residence.