Is my military income taxable to Arkansas?

According to the Arkansas Individual Income Tax Booklet, " If Arkansas is your Home of Record and you are stationed outside the State of Arkansas, you are still required to file an AR1000F reporting all of your income, including U.S. active duty military compensation. However, active duty military compensation is exempt from Arkansas tax beginning in tax year 2014. (If you are stationed in Arkansas and your Home of Record is another state, Arkansas does not tax your U.S. active duty military compensation.)" 

If you are a resident of Arkansas, you are required to file a return and claim all of the income for the resident state. The active duty military pay is not taxed on the resident return.

The active duty military pay can be excluded from the resident return by following these steps in the program:

1. State Section
2. Edit Arkansas Resident Return
3. Subtractions From Income
4. Military Income Exclusion
5. Enter the military income to exclude from the return
6. Continue and then continue through to Save & Exit Arkansas Return

If you are a nonresident of Arkansas, (Home of Record is not Arkansas) you are not required to file an Arkansas return unless you have income other than Military pay to report. If any other income, such as rental income, is from an Arkansas source, a nonresident return is required. Married nonresidents may file either a separate return claiming themselves only or a joint return claiming the total exemptions.

If you had taxes withheld from the military pay, you will need to file a nonresident return to claim a refund.  To exclude the active duty military pay from the nonresident return, follow these steps in the program:

1. State Section
2. Arkansas Nonresident Return
3. Subtractions From Income
4. Military Income Exclusion
5. Scroll down to the nonresidents section and enter the Arkansas portion of US Military compensation
6. Continue and then continue through to Save & Exit Arkansas Return

If one spouse is a resident of Arkansas and the other is not, you should file separate state returns. To do this within the program, you can file the federal return and wait for the return to be accepted. Then, change the filing status for the primary taxpayer and file a separate return for the first spouse. The second spouse will need to create a new account and file a separate return in that account.

Additional Information

Arkansas Military Spouses Residency Relief Act