Turbotax says it can't file our AL taxes

[marj33]

Good afternoon,

I'm active duty military, my spouse is a civilian who lived in GA for part of 2020.  Turbo tax has a warning message saying AL  requires we file separately even though we are filing federal jointly.  Well, does anyone know how to get this done online? Accountants want 700+ dollars just do file his state taxes.  

[AmyC]

If your wife is following you around to your assigned stations, she may be able to claim the same residency as you. See MSRRA: Military Spouses Residency Relief Act . This would allow you to file MFJ for AL and claim a credit for the GA income.

Otherwise, you can create a dummy MFS return. If you are using the FreeFile delivered by Intuit TurboTax. then price is not a concern. If you are paying for the returns, you may want to switch to the desktop to save money.

[marj33]

Thank you, isn't it too late for my husband (civilian) to claim my state of residency at this point? I just came across that earlier today as an option.  Just wondering if we can do it for this year's filing.  

What do you mean switch to desktop version?

[AmyC · Accepted solution]

My apologies! Thank you so much for your service!!!

The laws changed in 2018 for the spouse. If the spouse lived with you instead of their normal resident state and you were posted somewhere outside of your resident state, then your spouse can just say they are a resident of your state. In fact, the federal side wants you voting in the same state and says that for federal purposes, you are residents of the same state.

This was created to avoid the nightmare of MFS and MFJ and all the different rules between the states. You may have to file multiple states but they can all be MFJ.

If you meet the above requirements, you can definitely file that way.

If not, you will do a fake MFS federal to create a real MFS state return. See download products.

For full instructions, see How do I prepare a joint federal return and separate state returns?

[marj33]

No sweat at all.  Ok so we do qualify for  him claiming my home state.  I already paid for the online version .... could I file the federal on there and do a download for the state taxes? Thank you so much for your help by the way!

[AmyC]

You can file online. Do a GA nonresident and AL resident return, both will be MFJ. The GA return would be a refund since none of the income is taxable. See 2018 Withholding and Taxation of Military Spouses.pdf

Meanwhile, AL will tax it all.

Thanks again for your service. If you retire from the military, AL will not tax any of the retirement pay. One of the best states for military retirement.