According to Colorado FYI 21, "For tax years beginning on or after January 1, 2009, wages and tips of a qualifying nonresident spouse are not taxable in Colorado and should not be included on Form 104PN. A qualifying spouse must:
- Have moved to Colorado from another state,
- File an income tax return and report the Colorado wages in the state of residency, if applicable,
- Be in Colorado solely to accompany their active duty service member spouse who is stationed in Colorado in accordance with military orders, and
- Have the same state of residency as the home of record of the service member."
To claim tax-exempt from Colorado withholdings:
If you wish to claim tax-exempt withholding due to the Military Spouse Residency Relief Act (MSRRA), you will need to complete Form DR-1059 and submit it to your employer. You will also need to provide a copy of your military dependent ID card. This form needs to be completed each year.
To claim a refund of taxes withheld from your Colorado income, follow these steps in the program:
- Federal Section
- Wages and Salaries, edit the W-2 for the military spouse income and remove the information in Box 16 of the W-2. Leave the amount in Box 17.
- Click Continue to save changes.
Military Spouse income may be taxable on your state return where you file as a resident
Visit our article on Colorado Military Filing for more information.