35 Miss. Admin. Code Pt. III, Subpt. 7, Ch. 04 — Military

100 Section 574 of the Soldiers and Sailors Civil Relief Act provides that military duty pay can
be taxed only by the state in which the armed forces member is domiciled or is a legal
resident. A Mississippi resident who enters the military service remains a resident of this
state during the tenure of military service or until such time as legal and positive action is
taken to establish residence in some other state and the personnel records are changed
accordingly by executing through his or her command a state of Legal Residence
Certificate, Department of Defense Form DD 2058.
101 A member of the Armed Forces who claims Mississippi as his or her state of legal
residence/domicile is subject to Mississippi income tax on his or her total gross income,
regardless of the source of the income and regardless of where the member is stationed in
the line of duty. If the spouse of a resident member is also a legal resident of Mississippi,
he or she must also report total income to Mississippi, regardless of where earned. A tax
credit is allowed for income taxes paid to another state on nonmilitary income earned in
another state. Mississippi resident individual income tax return, Form 62-100 must be filed
by a resident member on or before April 15, following the close of the calendar year.
102 A nonresident member of the Armed Forces stationed in Mississippi who realizes income
from nonmilitary sources within the state or whose resident or nonresident spouse realizes
income within the state is subject to the requirements of filing a Mississippi nonresident
individual income tax return, Form 62-200. A Mississippi nonresident income tax return is
also required in the case of a resident member of the Armed Forces whose spouse is a
nonresident of Mississippi. In the above cases concerning nonresidents , only the
nonmilitary income earned in Mississippi and the total income earned by a Mississippi
resident would be reported as Mississippi income; however, the total income of both
taxpayers must be reflected on the nonresident form in order to properly prorate the
allowable exemptions and deductions.
103 The pay of military personnel employed by Non-appropriated Fund Instrumentalities such
as post exchanges, military stores, officers' clubs and other such instrumentalities was
declared by the Department of Defense to be off -duty or nonmilitary pay taxable and
reportable in the same manner as for civilian employees of NAFI's. Military pay of
members of the Armed Forces who claim Mississippi as their state of legal
residence/domicile and the pay of members from NAFI sources in Mississippi are subject
to the requirements of Mississippi income tax withholding.
104 Members of the United States Armed Forces generally include in income the same items as
civilians. The following list of taxable and nontaxable items of income and deductible
items of expense is intended to serve as a guide in answering questions frequently
encountered by the taxpayer and is not to be considered as all inclusive.

# 1.

Taxable Items:
Compensation for service in the Armed Forces:
a. Mileage allowance (less expenses for self)
b. Bonus paid for re-enlistment
c. Service pay
d. Voluntary allotments
e. Interest on G. I. life insurance dividends left on deposit with the Veterans
Administration
f. Payments received from a former employer
g. Retirement pay

# 2.

Not Taxable:
a. Benefit payments received under federal laws relating to veterans.
b. Benefit payments received under the G. I. Bill.
c. Cash received in lieu of subsistence and quarters.
d. Combat pay -- Enlisted members of the Armed Forces may exclude from
gross income all pay received for any month during which they served in a
combat zone, and officers may exclude up to $500 per month.
e. Commutation of quarters.
f. Compensation earned while a prisoner of war, missing in action or
detained status.
g. Disability pay -Disability pay is excluded unless it is in effect early
retirement caused by a disability and is based on the employee's age or
length of service. This applies even if the employee's retirement is caused
by an occupational injury or sickness.
h. Family allowances to spouses or dependents.
i. Reimbursement by the government for moving family and household
effects on a change of official station for permanent duty.
j. Subsistence.
k. Allowances for uniforms.
l. Widows' pensions received from the Veterans Administration.

# 3.

Deductible Items:
a. Cap and corp devices, campaign bars aiguilletes, epaulets and chin straps.
b. Local transportation expenses of reservists (limited) unreimbursed travel
and transportation expenditures in the course of employment.

# 4.

Not Deductible:
a. Damage to household furnishings in moving
b. Dues to officers' club
c. Expenses of visiting home
d. Living expenses of a naval officer stationed in one locality.
e. Lodging and meals on permanent overseas assignment or while
permanently assigned to a ship.
f. Naval officers' subsistence expenses in excess of the allowance while on
permanent duty afloat.
g. Uniform expenses where the uniform takes the place of ordinary clothing.
105 Exclusions from Gross Income
1. Retirement Income-Armed Forces:
a. Retirement allowances received by a retired member of the Armed Forces,
including the National Guard and Military Reserve, not based on disability,
must be included in gross income to the extent of income from retirement
pay, annuities and pensions that exceeds the sum of six thousand dollars
($6,000) for the taxable year. Income from retirement allowances, pensions
and annuities up to $6,000 for each taxable year may be excluded from
gross income.
b. The amount of reduction in retirement pay of a retired member of the
Armed Forces representing contributions to a Retired Serviceman's Family
Protection Plan (10 U.S .C. 1431) or a Survivor Benefit Plan (10 U.S.C.
1447) must be included in gross income for the taxable year in which the
contribution or reduction is made for Mississippi income tax purposes. The
total retirement allowances, annuities or pensions are subject to the $6,000
exclusion. Mississippi Law does not conform with Section 122, IRC, with
respect to the exclusion from gross income of the amount by which the
retirement or retainer pay of a member or former member of the uniformed
services is reduced in order to provide a survivor benefit.
c. Upon the death of a member or former member of the uniformed services,
where the "consideration for the contract" (cost basis of the annuity) has not
been excluded in whole or in part from gross income for Mississippi income
tax purposes, the survivor of such member who is receiving an annuity shall
exclude from gross income such annuity payments equaling "consideration
for the contract" (cost basis of the annuity) not previously excluded from
gross income by the member or former member of the uniformed services.
The $6,000 retirement income exclusion is also available to the spouse or
other beneficiary at the death of the primary retiree.
2. National Guard and Reserve Pay:
Compensation received by a member of the National Guard or Reserve Forces of
the United States for inactive duty training (monthly or special drills or meetings),
active duty training (summer camps, special schools, cruises) and for state active
duty (emergency duty) must be included in gross income to the extent such pay is in
excess of six thousand dollars ($6,000) for the taxable year. National Guard and
Reserve pay up to $6,000 for each taxable year may be excluded from gross
income. The exclusion does not apply to compensation or wages of full -time
uniformed employees of the National Guard or Reserve Forces, nor does the
exclusion apply to the wages of other employees such as secretaries, clerks,
technicians, laborers, equipment operators or staff personnel.
106 (Reserved)
107 (Reserved)
Subpart 08 Corporations