Spouse made money in separate state, how would we file?

[Ryanmlloyd]

I am a Maryland resident for tax purposes living in California. My (then girlfriend) made money in Virginia and received a Virginia W-2. I received a Maryland W-2. Filing federal was a breeze and everything, to my knowledge, looks good. When it comes to the state portion, I reach the Maryland return and all goes relatively smoothly. We then get to the Virginia portion. It tells me: 

"If you or your spouse had a state of residence that wasn't Virginia throughout all of last year, the state needs you to file separately. But if one of you had a state of residence that wasn't Virginia for just part of the year, you can decide if you want to file state taxes separately."

With that being said, I'm understanding that since she was a part year resident in Virginia, she could just file as either a part-year or non-resident. Continuing from there, it asks me about my state of residence and how it revolves around Virginia, but it's not me that has any ties to Virginia, it's my wife. 

I've done some research and it indicates that I'd have to file my Federal return now, wait for it to be accepted by the IRS, and then file a MFS return in Maryland for myself and a MFS return for my wife in Virginia. I'd really like to avoid dropping more money than I need to, but I've spent too many hours trying to research this and figure it out, and the clock is ticking haha. Any information anyone might have is greatly appreciated, and worst case I'll take myself into a Tax Filing Business and pay someone else to deal with it.

[DavidD66]

Based on your comments, your wife was resident of Virginia for part of the year.  What was her state of residence the other part of the year - Maryland, California, or both?  Or something else? 

[Ryanmlloyd]

By the time we got married, she quit her job in Virginia and moved to Califiornia to be with me, where she did not have any income. Under MSRRA, we believed she'd be able to claim Maryland residency for tax purposes to allow us to file a joint Federal return, which is what I began doing. She never sent any paperwork in saying "I'm a Maryland resident for tax purposes, I need to pay Maryland state taxes," since she didn't get another job. All of her income was made as a Virginia resident prior to us getting married. 

[DavidD66]

In addition to filing a joint federal return you need to file a Maryland return and your wife needs to file a Virginia return.  The Military Spouse Residency Relief Act (MSRRA) allows your wife to choose your state of residency, even if you did not share the residency prior to the move to California.  So, you can file separately or jointly for Maryland, and your wife needs to file a separate return for Virginia as either a full year resident or part year resident.  If you file MFS for Maryland she would file a Virginia return as a full year resident.  If you file a joint Maryland return she would need to file a part-year resident return for Virginia.  

[Ryanmlloyd]

So I'd file a MFJ Federal Return and a MFJ Maryland return, and then on a completely separate return, she'd file a part-year resident MFS return in Virginia? Sorry if I just restated what you said, just trying to dumb it down for myself. With that being said, when I file our federal and Maryland return, I'd just wait the few days for the IRS to accept my E-Filed federal return and then file her Virgina return? Thanks again!

[DMarkM1]

Yes and no.  Yes, e-file a joint Federal and MD return.  No, you don't need to wait.  In TurboTax online your wife will need to create a separate account.  She will create a "Mock" federal separate return with only her income/deductions.  The federal entries are needed to flow to her state return.  She will not actually file the separate federal return as she has already filed jointly at the federal level.  

She will need to print/mail the VA separate return.  

In the "My Info" section she will indicate she lived in MD on Dec 31st and lived in another state as well; select VA.  Enter the move from VA date.  This will generate part-year returns for VA and MD.  She does not need to complete/file the MD return as she has already filed jointly there as well.