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Wisconsin Department of Revenue

 Individual Income Tax
Military

Note: New for tax year 2005 and forward:

For federal purposes, an increase in death gratuity benefits from $12,500 to $100,000 has taken effect as of May 11, 2005, and is dated retroactively to October 7, 2001. This means that survivors of service members who died between October 7, 2001, and May 11, 2005, will receive the increased benefits, as well as survivors of service members who die from May 11 on.

Wisconsin follows these federal guidelines and amended returns can be filed for open years to recover up to $9,000 in military death gratuity payments which were subject to Wisconsin tax. Refunds will be made if the claim is filed within 4 years of the unextended due date on which the tax return was due.

  1. I am in the military and stationed outside Wisconsin. If I file the correct military papers to change my state of residency, have I legally changed my state of residency from Wisconsin to the other state?
  2. I am a Wisconsin resident in the military. My spouse is not a Wisconsin resident and has no Wisconsin income. Which tax return do I file for Wisconsin?
  3. I am in the military and I am temporarily stationed in Wisconsin. My spouse and I are not Wisconsin residents. My spouse earned wages working in Wisconsin. Is my spouse required to file a Wisconsin return and pay Wisconsin taxes on that income?
  4. I am in the military and stationed outside Wisconsin. I remain a Wisconsin resident. My spouse, who is also from Wisconsin, is living with me outside Wisconsin. My spouse is not in the military but is earning income outside Wisconsin. Is my spouse still considered a Wisconsin resident? Is my spouse still required to pay taxes to Wisconsin on income earned outside Wisconsin?
  5. I am living in another state while in the military. I maintain my Wisconsin residency, but my personal residence during the tax year is located outside Wisconsin. Can I use the rent I paid on my personal residence located outside Wisconsin to calculate the school property tax credit on my Wisconsin income tax return?
  6. I am in the military and stationed outside the United States. Can I claim the armed forces member credit?
  7. I am a nonresident service member stationed in Wisconsin. My spouse earned enough income for us to file a Wisconsin return. We wish to file a Form 1NPR using the married filing joint status. Does any of my military compensation get reported on the 1NPR?
  8. Does Wisconsin exempt any portion of military pay?
  1. I am in the military and stationed outside Wisconsin. If I file the correct military papers to change my state of residency, have I legally changed my state of residency from Wisconsin to the other state?

    No. To change your legal residence (domicile) from Wisconsin to another state, you must cut your permanent ties with Wisconsin, you must be physically present in your new state of residence, and you must establish permanent ties in your new state of residence. If any of these three criteria are not met, you are still considered a Wisconsin resident, regardless of where you are stationed. Caution: If you are unclear about your situation, you should contact our Department for further clarification before you change your state of residency with the military.

  2. I am a Wisconsin resident in the military. My spouse is not a Wisconsin resident and has no Wisconsin income. Which tax return do I file for Wisconsin?

    In this situation you have two options. You can file a Wisconsin Form 1 with a filing status of married filing separately. Under this option you show only your income on the Form 1. However, your tax may be higher and certain credits are limited by the married filing separately rules.

    The other option is to file a Wisconsin Form 1NPR for part-year residents and nonresidents. Under this option you can file a joint return with your spouse even though your spouse is a nonresident. If you use the Form 1NPR, your spouse's income will not be taxed. However, your spouse's income is used in calculating the percentage of your Wisconsin income to the combined federal income of you and your spouse. This percentage is then used to determine your Wisconsin gross tax prior to any allowable credits. See the Wisconsin Form 1NPR Instructions for more information.

    You should compute your tax liability under both options and then file under the option that is most advantageous to you.

  3. I am in the military and I am temporarily stationed in Wisconsin. My spouse and I are not Wisconsin residents. My spouse earned wages working in Wisconsin. Is my spouse required to file a Wisconsin return and pay Wisconsin taxes on that income?

    Yes, if your spouse has Wisconsin wages of $2,000 or more and your spouse is not a resident of a state with which Wisconsin has a reciprocity agreement, your spouse is required to file a nonresident tax return, Wisconsin Form 1NPR, and pay taxes on the income earned in Wisconsin. Wisconsin currently has reciprocity agreements with Illinois, Indiana, Kentucky, Michigan, and Minnesota. For more information on reciprocity, please refer to Wisconsin Publication 121, Reciprocity. Also see the Form 1NPR Instructions.

  4. I am in the military and stationed outside Wisconsin. I remain a Wisconsin resident. My spouse, who is also from Wisconsin, is living with me outside Wisconsin. My spouse is not in the military but is earning income outside Wisconsin. Is my spouse still considered a Wisconsin resident? Is my spouse still required to pay taxes to Wisconsin on income earned outside Wisconsin?

    Your spouse is a Wisconsin resident unless your spouse has taken steps to change his/her domicile to another state. If your spouse meets the following three requirements, he/she would not be considered a Wisconsin resident and would not be required to file Wisconsin income tax returns. Your spouse must have cut his/her permanent ties to Wisconsin, be physically present in his/her new state of residence, and establish permanent ties in his/her new state of residence. If your spouse does not meet all three of these requirements, he/she would still be considered a Wisconsin resident and would be required to file Wisconsin income tax returns. A Wisconsin resident's world-wide income is reportable to Wisconsin.

    Note: If your spouse is a Wisconsin resident who earned income that was taxed by another state, you may be able to claim a credit for such tax on your Wisconsin return. Please refer to the following for further information http://www.revenue.wi.gov/faqs/pcs/work.html.

  5. I am living in another state while in the military. I maintain my Wisconsin residency, but my personal residence during the tax year is located outside Wisconsin. Can I use the rent I paid on my personal residence located outside Wisconsin to calculate the school property tax credit on my Wisconsin income tax return?

    Yes, you can use the rent you paid on your principal home, even if it is located outside Wisconsin, to calculate the school property tax credit. However, you may not use rent paid for housing that is exempt from property tax, such as military housing or certain university-owned housing.

  6. I am in the military and stationed outside the United States. Can I claim the armed forces member credit?

    For tax years beginning on or after January 1, 2000, a member of the U.S. armed forces on active duty who receives military pay from the federal government while stationed outside the United States may qualify for the armed forces member credit. The tax credit equals the amount of military pay for services performed while stationed outside the United States, up to a maximum credit of $300. For a married couple filing a joint return, if both spouses qualify for the credit, each may claim up to $300. Part-year residents and nonresidents of Wisconsin are not eligible for the credit.

    An active duty member of the U.S. armed forces is defined in 26 U.S.C. section 7701(a)(15). "Military income" means an amount of basic, special, or incentive pay income received by a claimant from the federal government as those terms are used in 37 U.S.C. chapters 3 and 5. Members of the National Guard ordered to active duty in the U.S. armed forces are eligible for this credit provided they were stationed outside the United States and received their military pay from the federal government.

  7. I am a nonresident servicemember stationed in Wisconsin. My spouse earned enough income for us to file a Wisconsin return. We wish to file a Form 1NPR using the married filing joint status. Does any of my military compensation get reported on the 1NPR?

    No. The federal Servicemembers Civil Relief Act(Public Law 108-189) precludes any tax jurisdiction from using military compensation of a nonresident servicemember to increase the tax liability imposed on other income earned by the nonresident servicemember or spouse subject to tax by the jurisdiction. This means that not only do you not report the nonresident servicemember military income in the Wisconsin column(column B, line 1) of the Form 1NPR, but you also do not include it in the Federal(column A, line 1). Rather, the service member should write "nonresident servicemember" and the amount of military compensation received in the space to the left of line 1. In addition, this revised computation of tax for nonresident servicemembers is available for all open years and amended returns can be filed to omit this income.

  8. Does Wisconsin exempt any portion of military pay?

    Military pay, which is exempt for federal tax purposes, is also exempt for Wisconsin. For example, military pay which qualifies for the federal combat pay exclusion, is also exempt for Wisconsin tax purposes.

    As of tax year 2004, please note the following:

Reserve or National Guard Members. If you were a member of the Reserves or National Guard and served on active duty, you may subtract any military pay that is included on your W-2 and was:

CAUTION: The subtraction only applies to members of the Reserves or National Guard who are called into active federal service under 10 USC 12302(a) or 10 USC 12304 or into special state service under 32 USC 502(f). However, it does not apply to pay that members of the Reserves and National Guard receive for their weekend or two-week annual training. It also does not apply to a person who is serving on active duty or full-time duty in the active guard reserve (AGR) program.

FOR MORE INFORMATION PLEASE CONTACT:

WISCONSIN DEPARTMENT OF REVENUE
Customer Service and Education Bureau
P.O. Box 8949
Madison, WI 53708-8949
Phone: (608) 266-2486
Fax: (608) 267-1030
E-Mail Additional Questions

Last updated December 21, 2007