Active Duty stationed overseas; SLR is MN; nonmilitary spouse resides and works in NY

[tksbms413]

Hoping to get some guidance for this upcoming tax season! My spouse and I are planning to file jointly married, but we don't know how our state filing will work.

I'm an active duty service member stationed overseas in Korea, and I have been in Korea for all 12 months of the year 2021. My State of Legal Residency (SLR) is MN on my ERB/SRB, and my state tax withholdings go to MN on LES.

My spouse is nonmilitary, and she resides and works in NY (her state tax withholdings go to NY). She has been and worked in NY for all 12 months of the year 2021.

How should we proceed in filing our taxes? Thank you in advance!

[ThomasM125 · Accepted solution]

Thank you for your service!

Your spouse would be considered a resident of Minnesota like yourself, assuming she did not elect out of that. So, you would typically file married-joint in Minnesota and New York, as you can't file married-separate in New York if you file married-joint on your federal return.

Your income tax rate in New York will be reduced based on the income you earn out of state, which is your income. So, you shouldn't end up being double taxed.

You need to look for a credit for taxes paid to another state on your Minnesota return so you won't get taxed twice on your spouse's New York income. You should prepare your New York return first in TurboTax, before you prepare the Minnesota return.

You file as non-residents in New York.