According to the Minnesota Department of Revenue, "The federal Military Spouses Residency Relief Act (MSRRA) lets spouses remain legal residents of their home state if they temporarily move to another state to be with their active-duty military spouse. During this time, the spouse’s work-related income generally cannot be taxed in the state where the income is earned.
Beginning in tax year 2018, spouses of military members may elect to use the same residence as the military member for tax purposes.
Do I qualify for the subtraction?
If you’re on active military duty and stationed in Minnesota, your military wages are exempt from Minnesota tax. Your spouse’s work related income is exempt from Minnesota’s income tax if the following requirements are met:
- You’re in Minnesota because of your military orders.
- Your spouse is in Minnesota to be with you and didn’t move here for any other reason.
- You and your spouse are both legal residents of the same state (but not Minnesota)."
How do I claim tax-exempt from Minnesota withholdings?
You should give your employer a properly completed Form W-4MN to prevent or stop Minnesota income tax from being withheld from your wages. If you claim exempt from Minnesota withholding, you must provide your employer with a new Form W-4MN by February 15th of each year.
How do I claim a refund of taxes withheld from your Minnesota income?
Follow these steps in the program:
- State Section
- Minnesota Nonresident Return
- Income Subject to Tax
- Amount of Wages received as a nonresident military spouse, if certain requirements are met; see M1 instructions (Enter the Military Spouses wages that qualify as exempt under MSRRA as outlined above.)
- Continue
Military Spouse income may be taxable on your state return where you file as a resident.
For additional information see Military Personnel-Residency.