Peyton is transferred to North Carolina while on active military duty. How much of his income is taxable in California?

Peyton is transferred to North Carolina while on active military duty. How much of his income is taxable in California?

• A. $0
• B. $4,000
• C. $16,000
• D. $32,000

Answer: (A)

When a member of the military is stationed in another state due to active duty, their income is typically not subject to state taxation in their home state. In this scenario, Peyton, who is serving in North Carolina, is considered to have a non-taxable status in California for the income earned while on active duty. The Servicemembers Civil Relief Act (SCRA) protects military personnel from being taxed by their home state on income earned while stationed outside that state. Therefore, since Peyton is on active duty in North Carolina, California cannot tax his service income, leading to the conclusion that the amount of his income taxable in California is $0.

When a member of the military is stationed in another state due to active duty, their income is typically not subject to state taxation in their home state. In this scenario, Peyton, who is serving in North Carolina, is considered to have a non-taxable status in California for the income earned while on active duty. The Servicemembers Civil Relief Act (SCRA) protects military personnel from being taxed by their home state on income earned while stationed outside that state. Therefore, since Peyton is on active duty in North Carolina, California cannot tax his service income, leading to the conclusion that the amount of his income taxable in California is $0.