How do I deduct the military spouse’s income on the North Dakota return?

According to the Civilian Spouses of Military Service Members Guideline, "A civilian spouse’s compensation for work performed in North Dakota is exempt from North Dakota income tax if he or she meets all of the following conditions: 

• The civilian spouse and the service member maintain their domicile (or legal residence) in a state other than North Dakota. This condition is met even if each spouse has a different state of domicile.
• The service member’s permanent duty station is in North Dakota
• The civilian spouse is residing and working in North Dakota only because he or she wants to be with the service member.

Veterans Benefits and Transition Act of 2018

For tax years 2018 and after, a civilian spouse may elect to use the same state of domicile as the service
member for state tax purposes for any tax year in which they are married for any part of the tax year.

This means that, regardless of where a civilian spouse is actually domiciled under the general rules for
domicile, a civilian spouse who makes the election under the Act must be treated as being domiciled in
the same state of domicile as the service member for state tax purposes.

In addition to the spousal election option in the prior item, for tax years 2022 and after, a civilian spouse may elect to use the state of the service member’s permanent duty station for their domicile.

To claim tax-exempt from North Dakota withholding's:

An eligible spouse can stop the withholding of North Dakota income tax from his or her wages by completing Form NDW-M and giving it to the employer. A copy of the civilian spouse’s dependent military ID card must be attached to Form NDW-M. Form NDW-M is valid only for the calendar year for which it is completed. Additional information may be required.

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

1. State Section
2. Edit North Dakota Nonresident Return
3. Begin on Income Subject to Tax
4. Enter the amount of W-2 income to exclude in the box labeled "Enter the amount of W-2 income to exclude under the Military Spouses Residency Relief Act" (Do not enter the military service members income here- only the military spouse income.)
5. Continue to Save

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