1. Who is eligible for the nonresident military spouse withholding exemption?
   
   
2. How does the servicemember's spouse claim a refund for Wisconsin income taxes withheld during 2023?
   
   
3. How does the servicemember's spouse inform their employer to stop withholding Wisconsin income tax?
   
   
4. Must the servicemember and spouse reside together?
   
   
5. Are other types of income also exempt from Wisconsin income tax for a nonresident military spouse?
   
   
6. What causes the spouse to no longer be eligible for the exemption from Wisconsin income tax and withholding?
   
   
7. How does the servicemember's spouse notify the employer that they are no longer eligible for the exemption?
   
   

1. Who is eligible for the nonresident military spouse withholding exemption?

   An employee’s wages are exempt from Wisconsin income tax and withholding if the employee meets all the following conditions:

   1. The employee is the spouse of a servicemember.
   2. The servicemember is present in Wisconsin in compliance with military orders.
   3. The spouse is in Wisconsin solely to be with the servicemember.
   4. The spouse qualifies and chooses to make an election under 50 U.S.C. 4001(a)(3) to use one of the following residences or domiciles:
      • The residence or domicile of the servicemember.
      • The residence or domicile of the spouse.
      • The permanent duty station of the servicemember.
   5. The spouse’s choice of residence or domicile is not Wisconsin.
      
      

   If an employee meets all the above requirements, the employee should complete Wisconsin Form W-221, Nonresident Military Spouse Withholding Exemption, and give the form to their employer because the employee's wages are exempt from Wisconsin income tax and withholding. If the employer withheld Wisconsin income tax from the employee's wages, the employee may request a refund of the withheld taxes as explained below.

2. How does the servicemember's spouse claim a refund for Wisconsin income taxes withheld during 2023?

   The servicemember's spouse must file a 2023 Form 1NPR (income tax return for nonresidents and part-year residents of Wisconsin) to claim a refund of Wisconsin income taxes withheld. See page 17 of the 2023 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 58. Fill in the rest of the form.

3. How does the servicemember's spouse inform their employer to stop withholding Wisconsin income tax?

   The servicemember's spouse should complete Wisconsin Form W-221 and give the form to their employer. It is not necessary for this form to be filed annually. It remains in effect until revoked.

4. Must the servicemember and spouse reside together?

   Yes. The servicemember and spouse must reside together for the spouse to be eligible to qualify for the withholding exemption.

5. Are other types of income also exempt from Wisconsin income tax for a nonresident military spouse?

   Yes. If the spouse of a servicemember meets all the conditions in common question #1 above, then any income for services performed by the spouse is exempt from Wisconsin income tax. Examples include:

   • Wages for services performed in Wisconsin
   • Income from self-employment for services performed in Wisconsin
     
     

6. What causes the spouse to no longer be eligible for the exemption from Wisconsin income tax and withholding?

   If any of the conditions in common question #1 are not met, then the spouse no longer qualifies for the exemption from Wisconsin income tax and withholding. Examples include:

   • 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
     
     

7. How does the servicemember's spouse notify the employer that they are no longer eligible for the exemption?

   The servicemember's spouse must notify the employer that they are no longer eligible for the exemption by completing Parts I, III, and IV of Wisconsin Form W-221 and giving it to the employer.

   Note: The spouse may be required to complete Wisconsin Form WT-4, Employee's Wisconsin Withholding Exemption Certificate/New Hire Reporting, and give it to the employer so that the correct amount of Wisconsin income tax can be withheld from the wages.

Applicable Laws and Rules

This document provides statements or interpretations of the following laws and regulations enacted as of January 22, 2024: sec. 71.01, Wis. Stats., Servicemembers Civil Relief Act (P.L. 108-189), Military Spouses Residency Relief Act (P.L. 111-97), Veterans Benefits and Transition Act of 2018 (P.L. 115-407), Veterans Auto and Education Improvement Act of 2022 (P.L. 117-333), and 50 U.S.C. 4001.

Laws enacted and in effect after this date, new administrative rules, and court decisions may change the interpretations in this document. Guidance issued prior to this date, that is contrary to the information in this document is superseded by this document, according to sec. 73.16(2)(a), Wis. Stats.

The department welcomes your input on our guidance. Submit comments on this guidance document.

Guidance Document Number: 100173

January 22, 2024