Tax Refund Taxable Income

Question: PA National Guard Pay for state income tax, taxable or non taxable?

My husband is in the PA NG and he has a full time job there (he is AGR). His W2 has PA state wages and PA state tax withheld, but turbo tax asked me if this is supposed to be taxable since he is in the military. No he was not deployed and did not serve in a combat zone at all in 2009. Is full time NG pay taxable for the state of PA? Or should I say exempt and get a refund of the tax he paid in?

Also his local tax box on his W2 is blank, so I am assuming that his pay is non taxable? It has been my professional knowledge that local taxability always follows state, expect for certain items such as church housing etc.

Thanks!

Answer: Hello,

I work for a tax preparation company and can tell you that sometimes military tax returns can be confusing. My husband is also in the PA National Guard but was deployed in 2009. Let me try to help you out. (By the way, this is my first “Yahoo answer.”)

It sounds like your husband’s wages will be fully taxable for federal and that you should enter all wages in box 1 as taxable. (If he were deployed in a combat zone those wages would not be taxable. The W-2 would not include them in box one; the nontaxable combat pay would appear elsewhere in the W-2.)

The same goes for Pennsylvania. All wages in box 16 will be fully taxable. The only difference is that if your husband worked outside of PA for any time in 2009, those wages would not be taxable to the state of PA. You’ll have to look at the numbers as reported on the W-2 to figure this out.

As for local taxes – he is responsible for paying them. DFAS does not withhold local tax. You can contact your local tax office for the forms. They can even help you figure out how to do them. The tax due to them would be a percentage of the local wages included in box 18. Many PA guardsmen owe local taxes due to DFAS not withholding. My husband always owes in for this.

www.militaryonesource.com offers free tax preparation software with H&R Block – which I highly recommend. You can also check out www.irs.gov or www.tax.state.pa.us for more information.

Hope this helps!

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