A military spouse may be able to exclude income earned in Massachusetts from Massachusetts taxation if they qualify under the Military Spouses Residency Relief Act (MSRRA) or the Veterans Auto and Education Improvement Act.
To qualify, the spouse must generally meet the applicable residency requirements and be exempt from Massachusetts tax on wages earned while living in Massachusetts with the servicemember.
Claiming an Exemption From Massachusetts Withholding
Claiming the Exclusion in the Program
If the military spouse qualifies for the exemption and Massachusetts tax was withheld from their wages, enter the exempt income using the following path:
- State
- Massachusetts Nonresident Return
- Deductions
- Enter income excludible under MGL Ch. 41, Sec. 111F and/or Military Spouse's Nonresident Income
- Enter the spouse's income that is not subject to Massachusetts tax
This entry removes the qualifying military spouse income from Massachusetts taxable income and allows any Massachusetts withholding to be refunded.
Paper Filing Requirement
When claiming the military spouse exemption:
- Print and sign Form 1-NR/PY.
- Write "MSRRA" across the top of the return.
- Mail the return to Massachusetts.
Massachusetts requires these returns to be filed on paper when claiming the MSRRA exemption.
Required Documentation
Include copies of:
- Military Spouse ID Card
- DD Form 2058 (State of Legal Residence Certificate)
- Servicemember's Leave and Earnings Statement (LES)
- Current military orders assigning the servicemember to duty in or near Massachusetts
These documents help support the spouse's claim that the income is exempt from Massachusetts tax.
Important Notes
Even if the military spouse's income is exempt from Massachusetts tax, the income may still be taxable in the state where the spouse is considered a resident and files a resident state return.