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Question for the Money Doctors

Question submitted on Aug 31, 2011.

Question

I am in the military and my home of record is Alabama. I pay state tax to Alabama, however, I am currently stationed in Illinois and have purchased a home in Illinois. Do I have to pay state income tax to Illinois because I''m a home owner in that state or can I still claim Alabama as my home of record?

Answer

First and foremost THANK YOU FOR SERVING!!!

Different states have different rules for taxing military pay and military retired pay.

ILLINOIS

Illinois Dept. of Revenue
Taxpayer Correspondence
P. O. Box 19044
Springfield, Illinois 62794-9044
(800) 732-8866
Forms: (800) 356-6302

Military income is not taxed. Nonresident military members who receive nonmilitary income from an in-state source must file. Military income is not used when computing tax on nonmilitary income.

ALABAMA</span>

Ala. Dept. of Revenue
Income Tax Division
Individual Audit Section
P.O. Box 327410
Montgomery, AL 36132
(334) 242-1000

General Information: Military members who are legal residents are taxed using federal income tax rules. Nonresident military members who receive nonmilitary income from an in-state source must file. Military income is not used when computing tax on nonmilitary income. Military retired pay and SBP benefits are not taxed.

As you can see from the above (and I''ve added resources to make your life easier) Illinois does not tax military pay (somebody finally got it right for our military). Alabama on the other hand...well it sounds like you''re used to that!!!

I think the question should be "As an Illinois resident do I still have to pay taxes to the state of Alabama where I am not a resident, but merely the owner of property (house)"?

Get it?....I see an Illinois drivers license coming on and poor Alabama...sounds like they are going to lose the tax revenue from a military employee...

On behalf the Money Dr., all it''s staff, and my family (my dad was Airforce) GOD BLESS and again THANK YOU!!!


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