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Instructions For Form Tsb-M-10(1)i - Income Tax - Office Of Tax Policy Analysis Taxpayer Guidance Division Page 2

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TSB-M-10(1)I

Income Tax

TSB-M-10(1)MCMT

MCTMT

January 11, 2010

as long as New York State remains the servicemember’s permanent United States duty station.

However, the rules will no longer apply if the servicemember’s permanent United States duty

station is no longer in New York State and the military spouse remains in New York State.

Exemption from taxes for certain income of a military spouse

In general, New York Tax Law provides that a nonresident individual who has New York

source income (for example, wages or business income earned in New York) will be subject to

personal income tax on that income.

However, under the Act, a military spouse’s income that is earned in New York State will

not be treated as New York source income and will therefore be exempt from any personal

income tax if:

• the military spouse is a nonresident of New York State, and

• the military spouse is in New York State solely to be with the servicemember and the

servicemember is in New York State in compliance with his or her military orders.

For purposes of the exemption, income earned in New York State includes:

• wages, salaries, and other compensation for services performed by a military spouse in

New York State as an employee, and

• any business income or loss (other than a capital gain or loss from the sale of real

property located in New York State) a military spouse has from a sole proprietorship

carried on in New York State or from a partnership, including an LLC treated as a

partnership, where the partnership or the LLC carries on business in New York State, if

the income or loss or any part of the income or loss is required to be included in the

computation of net earnings from self-employment for purposes of the federal Self-

Employment tax (SE tax).

The income exemption only applies to the military spouse. It does not apply to non-

military income earned in New York State by a servicemember.

Transfers and relocations. If a military spouse has met the conditions for the income

exemption under these rules, and the servicemember is subsequently assigned outside the United

States or to another state, and the military spouse remains in New York State, the income

exemption will continue to apply as long as New York State remains the servicemember’s

permanent Unites States duty station. However, the income exemption will no longer apply if the

servicemember’s permanent United States duty station is no longer in New York State and the

military spouse remains in New York State.

Instructions For Form Tsb-M-10(1)i - Income Tax - Office Of Tax Policy Analysis Taxpayer Guidance Division Page 2