Who is eligible?
A spouse of a servicemember may be exempt from Wisconsin income tax on income from self-employment and wages for services performed in Wisconsin if all of the following are true:
- The servicemember is present in Wisconsin in compliance with military orders
- The spouse is in Wisconsin solely to be with the servicemember
- The spouse maintains a domicile (legal residence) in another state
If the spouse meets the above requirements, the spouse is entitled to a refund of any taxes paid to Wisconsin through withholding and estimated payments in 2019. The spouse will pay tax to the state of his/her domicile for 2019, if the state has an income tax.
How does the servicemember's spouse claim a refund for Wisconsin income taxes withheld during 2019?
The servicemember's spouse must file a 2019
Form 1NPR (income tax return for nonresidents and part-year residents of Wisconsin) to claim a refund of Wisconsin income taxes withheld. See
page 16 of the 2019 Form 1NPR instructions. Fill in "15" in the Special Conditions box on page 1 of the Form 1NPR. If more than one Special Condition applies to the servicemember or spouse, put "99" in the box, and list the separate code numbers on the line next to the box. Do not include Wisconsin wages on page 1, column B, line 1. Report Wisconsin withholding on page 3, line 59. Fill in the rest of the form.
What does the servicemember's spouse need to do in order to not have Wisconsin income taxes withheld from wages during 2020?
To claim an exemption from Wisconsin withholding, the nonresident spouse of the servicemember must file Wisconsin
Nonresident Military Spouse Withholding Exemption, with his/her employer. It is not necessary for this form to be filed annually. It remains in effect until revoked (see below).
Must the servicemember and spouse reside together in Wisconsin?
Yes. The servicemember and spouse must reside together in Wisconsin for the spouse to be eligible to be exempt from Wisconsin income tax on income from self-employment and wages for services performed in Wisconsin. The servicemember and spouse may be domiciled in different states.
May the spouse claim a new state of domicile after moving into Wisconsin and be eligible for the exemption?
No. The spouse must have established a domicile in a state other than Wisconsin prior to moving to and residing in Wisconsin with the servicemember spouse in order to qualify for the exemption.
The spouse must be able to show that he/she established a domicile in another state before moving into Wisconsin and the spouse must maintain the earlier domicile while residing in Wisconsin with his/her servicemember spouse.
What income is eligible for the exemption?
- Wages for services performed in Wisconsin
- Income from self-employment for services performed in Wisconsin
- Pass-through entity income unless the pass-through entity has income from Wisconsin sources
- Real estate rental income from property not located in Wisconsin
- Royalty income
What causes the spouse to no longer be eligible for the exemption?
- The servicemember leaves military service
- The servicemember and spouse are divorced or separated
- Physical separation due to duty changes where the spouse is allowed to follow but chooses not to
- The spouse takes an action that clearly establishes Wisconsin as his/her state of domicile
- Filing a court action
- Accepting in-state tuition
- Applying for certain state benefits such as tax credits available only to Wisconsin domiciliaries
How does the servicemember's spouse notify the employer that he/she is no longer eligible for the exemption?
The servicemember's spouse must notify the employer that he/she is no longer eligible for the exemption by completing Wisconsin
Nonresident Military Spouse Withholding Exemption, and submitting it to the employer. There is a check box on the form for the spouse to indicate that he/she no longer qualifies for the exemption. The nonresident spouse will also have to complete Wisconsin
Wisconsin Withholding Exemption Certificate, and submit it to the employer so that the correct amount of Wisconsin income tax can be withheld from wages.
This document provides statements or interpretations of the following laws and regulations in effect as of October 22, 2019: Section 71.01, Wis. Stats., and 50a U.S. Code § 571.
Laws enacted and in effect after October 22, 2019, new administrative rules, and court decisions may change the interpretations in this document. Guidance issued prior to October 22, 2019, that is contrary to the information in this document is superseded by this document, pursuant to sec. 73.16(2)(a), Wis. Stats.
FOR QUESTIONS OR COMMENTS CONTACT:
WISCONSIN DEPARTMENT OF REVENUE
Individual Income Tax Assistance
PO Box 8949
Madison, WI 53708-8949
Phone: (608) 266-2486
Fax: (608) 267-1030
Email additional questions to