I’d appreciate it if you can help me out with this multiple state-tax query.
Both me and my wife have our home in CA (our DLs, bank accounts, mailing address etc., are all in CA, and our kid goes to pre-school in CA), but my wife took up a temporary job opportunity in IL and lived there (renting an apt) for a portion of 2016 (05/01 – end of year). Overall, she spent more time in CA than IL.
Given this situation, I am trying to figure out the best way to handle our state taxes:
There are two questions I am not clear about:
- Is my wife a resident or non-resident of IL? Reading the rules on IL tax website, it looks like she is a non-resident for tax purposes because (1) she will be a resident of CA, (2) her stay is temporary. Please correct me if wrong.
- Regardless of my wife’s residency status, is it advisable for us to use MFS status for state tax returns? My income (salary, stock options etc.,) is substantially higher than my wife’s, so by filing MFS, I might be paying a lot of more state taxes. But, on the other hand, given that CA is a community property state, the disparity in income is probably not a factor in the tax calculation.
- As a corollary to #2, if we file as MFJ in CA, and my wife files MFS in IL, can we still get CA credit for takes paid to IL in some form?
- Or, can we simply file MFJ (resident) in CA and MFJ (non-resident) in IL and take credit for taxes paid to IL?
I appreciate any help or guidance!
Thanks in advance!
