Only I worked in another state, my wife didn't — do I include her info in that state return?

[dcard]

we live in NJ. I work in NY. I'm filing a NY non-resident return. Do I need to include all of my wife's income and other info on the NY return? None of it is subject to NY tax. Does it need to match my Federal Return? Do I need to "file jointly," or can I file as "married filing separately?"

[ChristinaS]

You may file a separate New York return if both spouses are nonresidents but only one has New York source income. This is an exception to the rule of having to file with the same federal status.

If you file jointly, all of your joint income is a factor in the calculation. That being said, joint can be better if your spouse's income is minimal.

See page 15 along the left-

https://www.tax.ny.gov/pdf/current_forms/it/it203i.pdf

If you choose to file separately, you may need to prepare a "mock" separate federal return for yourself. Turbo Tax does not automatically isolate what's yours on the federal return, so this usually requires a second username.

Alternatively, you can prepare the mock separate federal return in the same account, transmit the NY return only (do not transmit this federal return), then switch to joint and efile NJ and federal.

[dcard]

This seems contrary to what the instructions say:

If you filed a joint federal return and:
1) both spouses are nonresidents but only one has New York
source income, or
2) one spouse is a part?year resident and the other is a
nonresident with no New York source income,
you must file a joint New York State return using filing status
and include in the Federal amount column the joint income as
reported on your federal income tax return. However, only the
spouse with New York source income (or the part?year resident
spouse) should sign Form IT?203. That spouse must also
complete Form IT?203?C, Nonresident or Part-Year Resident
Spouse’s Certification (see Other forms you may have to file),
and submit it with your Form IT?203.

Frankly, it doesn't seem right that I'm taxed in NY on NJ income earned by my spouse. I'm filling in the NY form manually, and it's including _all_ income, including a pension disbursement from a non-NY source.

Am I lying/committing fraud if I simply don't include it?

[ChristinaS]

The instructions indicate this exception. However, the insert of the exception is placed awkwardly on the page.

[ChristinaS]

Your tax is allocated on IT-203. See similar discussion on how nonresidents and part years are taxed.
<a rel="nofollow" target="_blank" href="https://ttlc.intuit.com/questions/4043504-in-filling-out-my-ny-state-return-it-appears-my-full-feder...>

Tax is calculated on all income, then allocated based on NY source income.

[ChristinaS]

You are probably right about needing to file jointly. I think the placement of the "both are nonresidents, but only one has NY source" is incredibly hard to follow in the layout in the instructions. It seems to be blended in to the section about being an exception. Either way, though, definitely follow input for IT203 and the allocation of tax