I'm married and we are residents in MN, but my income is earned in IL and we also own a home there too. My wife's income is earned in MN. We typically file jointly and file both MN and IL state taxes. Neither of us are IL residents. What I'm struggling with is it looks like both of our incomes are being used to determine IL taxes. My wife's income is solely earned in MN, so I would think it's just my income that should be used to determine IL taxes and since we are residents of MN, both would be used for MN.
The other part is what advantages would I have if we filed separate? Also, would it be better if I became a resident of IL if we file separate? There are potentially other tax savings such as Homestead on property taxes in IL that I could take advantage of if I were a resident. My wife would remain a resident of MN, which should allow us to remain homestead in MN.
I ultimately need to figure out our best tax situation, because we have been consistently paying high 4 figures come tax time.
