Yes, assuming your spouse is not living in NC and therefore has established a new resident state you can still file as Married Filing Jointly (MFJ) at the federal level. You can also file the same status (MFJ) in NC. However, for NC if one spouse is non-resident with no NC source income then the NC resident can file as Married Filing Separately (MFS). Here is the NC reference.
1. Can I file my NC tax return as MFJ when my spouse is a nonresident of NC (not even a part-year resident)? Yes
If yes, would we have to report my spouse's WA income on the NC return? Yes, but you would be able to allocate to NC only that income that belongs to NC to arrive at percentage used to determine NC taxable income.
Which standard deduction would apply in this situation? Married Filing Joint ($25,500). For a MFJ return NC uses all income and subtracts the joint standard deduction and multiplies that result by the percentage of NC income/total income.
2. Can I file my NC return as MFS considering our federal return is MFJ? Yes.
Is it worth going down this path? Possibly. You need to figure both ways to see which works out better. Typically filing a separate return will yield a lower state tax.
3. We both have W2 incomes and separate other typical income types (1099-INT, 1099-DIV). However, we have a joint savings account (in which we both contribute). For this account, 1099-INT will be issued to me/I am the primary account holder. Does this income count towards NC source of income for my spouse? No. Her part of the interest was earned as a non-resident of NC.
Does this require us to file MFJ for my NC state return? No. When you complete your Federal "mock" MFS return in the 1099-INT topic you can select the option to change the taxable amount of the interest to only include your portion. Then only that amount of interest on that account will transfer to NC for your separate return. All of the interest will be reported on your actual/filed federal joint return.
4. Given our situation, should we consider filling MFS for federal and state returns? Yes. You should figure your NC taxes filing jointly and allocating versus filing a MFS return with only your income.
Or any other recommendations? Yes. Purchase TurboTax desktop version. There you can create and file a MFJ federal return to produce a NC MFJ return with allocations plus create a "mock" federal MFS return with only your income to produce a NC MFS return for comparison.
If the NC MFJ return is the lower tax for you, then you can e-file that one with your federal MFJ. However, if the NC MFS return is better, you will have to print/mail that one since you will not file the "mock" federal MFS return.
Here is a link with more information on the process.
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