@GamaK
1. Should we file taxes next year as married filing jointly .......
Generally and because you are both "Resident for tax purposes ", it may be better to file the federal as Married Filing Joint, For State purposes, it may be simpler to each file as Married filing Separate. The reason for this is , in here case, MI will claim that the earnings from another state is earned in MI and should be taxed in MI because the work is done in MI ( IRS generally follows this ). She will also have to file a DC return to claim back all the taxes withheld by DC.
2. She is a student ( interning in another state ) and would generally be considered "transient in MI ". Her home base is still DC and so there is no need to change her State id but tax withholding should be changed with the employer ( U in DC ).
Is there more I can do for you ?
