How can I exempt a military spouse from state income tax?
To mark an employee as exempt from state income tax (SIT) due to a military spouse situation:
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If you have a presence in the new work state:
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Update the appropriate assignment location with a location in the worker's new work state.
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Open the employee's Tax Withholding card for editing.
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In the state regional component, set the employee as an exempt military spouse.
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If you don't have a presence in that state:
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Use the Locations task to define a location in the state.
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Create a Work Tax Address override for the assignment. It must represent an address in the employee's original state of residence.
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Create a Mailing Address for any correspondence while the employee is in the new state.
Don't change their Home Address to reflect the state of residence.