Civilian Pay Earned by Active Duty Military
When an active duty servicemember also has civilian/nonmilitary wages
The Servicemembers Civil Relief Act of 2003 continued to provide that active duty military members may only be taxed on their military pay by their state of legal residence (often the same as their home of record.)
If you're not sure of your military state of legal residence, check out Filing State Income Taxes When You Are in the Military.
However, if you are an active duty servicemember and also work a nonmilitary/civilian job or are freelancing, you will probably have to file taxes in that state you are physically working in.
You'll file as a nonresident for that state. If you have to file a state return for your resident state, most of the time you can get a credit for the taxes paid on your nonresident return.
Here's an example.
John joined the military in Georgia and that's his state of legal residence. He's currently stationed in Virginia. On the weekends, he works at the local Home Depot.
He will have to file a Virginia nonresident tax return and will only be taxed on his nonmilitary wages. He'll also file a resident state return with Georgia. The Georgia return will include both his military and nonmilitary wages and all other taxable income. He'll get a credit for the Virginia taxes paid on that Georgia return.
Spouse of an active duty servicemember
The rules for what state the spouse of a military servicemember needs to file in are not the same as for active duty military. For more information, see Military Spouses and State Taxes.
