How do I deduct the military spouse's income on the Maryland return?

According to the Maryland, "The wages earned by a spouse of a nonresident U.S. service member may be exempt from Maryland income tax under the Military Spouses Residency Relief Act, when the spouse of the service member is not a legal resident of Maryland. "

The spouse of the service member may be exempt from Maryland income tax on income from services performed in Maryland if: 

• the service member is present in Maryland in compliance with military orders
• the spouse is in Maryland solely to be with the service member
• the spouse maintains domicile in another state.

To claim tax-exempt from Maryland withholdings: 

A spouse whose wages are exempt from Maryland income tax under the Act may claim an exemption from Maryland withholding tax by completing form MW507 AND a MW507M.  Complete new exemption forms yearly.

To claim a refund of taxes withheld from your Maryland income, follow these steps in the program:

1. State Section
2. Edit Nonresident Maryland state return  
3. Basic Information  
4. Complete all sections regarding the military. Be sure to select Yes to 'Was Maryland tax withheld in error from your Maryland income?'.
5. Save

Military Spouse income may be taxable on your state return where you file as a resident.