State taxes, active duty military, Michigan

If Michigan is your Home of Record and your state of legal residence on your LES, you are required to file a Michigan resident income tax return MI-1040, regardless of where your income is earned. Military pay is exempt from Michigan tax. However, most interest, dividends, capital gains and other income received is subject to Michigan income tax. You should file an MI-1040, Schedule 1 and Schedule W and subtract your military pay, to the extent it is included in federal adjusted gross income (AGI).

The Michigan exclusion is taken in the Federal section of TurboTax by marking your military W-2 as active duty income:

• Once in your tax return, click on Federal Taxes tab
• Click on Wages & Income
• Click Edit next to your military W-2
• Click Continue on the W-2 entry screen to get to the screen titled "Do any of these uncommon situations apply to this W-2?
• Click the box to the left of Active duty military (see screen shot below)

Michigan return:

As you walk through your Michigan return, watch for a screen titled "Deduction for Military Pay".  It should state that your military income is not taxable.  (see screen shot)

Once simple way to check that your military wages have been subtracted from Michigan taxable income (if you don't have any other subtractions) is to click on My Account on the blue dashboard and choose Tools.  Under Other helpful links.... click View Tax Summary.  Click MI Tax Summary (in gray) under My Account.  Your military wages should show next to Michigan Subtractions.