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Active military pay not taxable in PA

Forum|Forum|6 years ago
June 1, 2019
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PA HB561 passed in February, 2016 indicates active duty military pay is not taxable even if earned inside PA, however, does not appear software is updated with this info. Link to bill https://legiscan.com/PA/text/HB561/2015

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Best answer by re2boys

The bill that you cited only applies to a change in the definition of earned income for PA LOCAL TAXES ONLY. It does not apply to PA state income tax.

Thus military pay earned by PA residents on active duty stationed outside the state is not taxable by PA

Military pay earned by PA residents on active duty inside the state is taxable by PA.

With this bill, military pay earned on active duty is not subject to PA local earned income taxes, regardless if earned inside or outside the state of PA.

See this page from one of the authorized local earned income tax collection agents:

http://www.hab-inc.com/forms/forms-for-individuals/

R

re2boysAnswer

The bill that you cited only applies to a change in the definition of earned income for PA LOCAL TAXES ONLY. It does not apply to PA state income tax.

Thus military pay earned by PA residents on active duty stationed outside the state is not taxable by PA

Military pay earned by PA residents on active duty inside the state is taxable by PA.

With this bill, military pay earned on active duty is not subject to PA local earned income taxes, regardless if earned inside or outside the state of PA.

See this page from one of the authorized local earned income tax collection agents:

http://www.hab-inc.com/forms/forms-for-individuals/

C

ChristinaS

You need to access a checkbox in the Pennsylvania interview if your active duty income is excludable:

Go to State Taxes and either edit or start the PA resident return
you will hit a screen Compensation Summary- edit your W2
Click "Entire amount of this income is not taxable in PA" on the Verify This Income page

In Turbo Tax, you often have to verify a state tax treatment in the State interview. Not all state rules are recognized through the federal interview alone. PA has additional requirements to exclude active duty.

Start on page 29 to review the tax treatment for PA state tax- the factors of your specific situation impact your ability to exclude this income:

http://www.revenue.pa.gov/FormsandPublications/PAPersonalIncomeTaxGuide/Documents/pitguide_chapter_0...

See attached for the screens to make excludable, if it should be.

C

ChristinaS

Because Turbo Tax does not ask you a lot of questions about your military service (in the PA interview), ensure that you have read the PA state income tax guidelines (link above) before excluding your income.