Separate state filing for TX and VA? Working as SOFA overseas?

[kelce]

Hello, 

I have some questions about state filing and also working overseas under SOFA status.

My husband is active duty and we are overseas in Japan. We got married here in Japan last year so his home of record is VA and mine is TX. I know military spouses can use the active duty's state but I didn't technically come with him here on orders. So I'm not sure if I quality for that or not. Do we need to file separate state, but together for federal? Just completely separate? How do we handle this? 

Also I work as a contractor for a Japanese company.  They take out the SOFA taxes from my checks and said to file for the US taxes as if I am my own business. I have a summary of my 2020 earnings but I'm not going to be getting any thing like a w-2 or other tax form from them. When going through the questions I'm not sure how to handle this income. 

Thanks for any help! 

[DanaB27]

Yes, you qualify to elect to claim VA for tax purposes because of the Military Spouse Residency Relief Act (MSRRA). Or you can keep TX.

Please be aware that TX does not have a State income tax therefore it might be more beneficial if you keep TX for now.

If you choose this then your husband will file a separate VA return. "If you and your spouse filed a joint federal return, but only one of you is a Virginia resident, the resident must use Filing Status 3 - Married, Filing a Separate Return" (VA Tax).

You will file your federal return married filing jointly since this is usually more beneficial.

Please follow these steps to enter your income under self-employment income:

1. Login to your TurboTax Account 
2. Click on the Search box on the top and type “self-employed”
3. Click on “Jump to self-employed”
4. Continue through the questions
5. "How much of your  work took place within the United States?" screen answer "None of this work took place within the United States"

 If you were 330 full days during a 12-month period in Japan then you might qualify for the Foreign Earned Income Exclusion under Physical Presence Test for your self-employment income. Please follow these steps: 

1. Click on the Search box on the top and type “foreign income”
2. Click on “Jump to foreign income”
3. Choose “A Form 1099-MISC or other self-employment income” and click “Continue”.
4. On the "Enter Your Gross Profit From Foreign Self-Employment" screen enter your gross profit
5. TurboTax will walk you through the questions.

 Please see How do I prepare a joint federal return and separate state returns? , What is the self-employment tax?, What self-employed expenses can I deduct? for additional information.