topic Re: How do I file? in State tax filing

How do I file?

max1112 — Sat, 08 Feb 2025 22:02:51 GMT

My wife and I live in Minnesota - I lived and worked here the whole year, she moved in late december and worked in North Carolina the whole year. How should we file our taxes?

Re: How do I file?

DianeW777 — Sat, 08 Feb 2025 22:46:20 GMT

The required filing status for both states is shown below. As you can see they both require a married couple to use the filing status used on the federal return.

Minnesota (MN) - You must use the same filing status on your state income tax return as on your federal return.
North Carolina (NC) - The filing status claimed on the federal return must also be claimed on the North Carolina income tax return.

Here is what this means to you. First you must determine state residency, each of you. If both of you do not have the same residency, then filing as married filing separately may be the best. This could cause a higher tax all around, however it may be necessary because of the residency.

Domicile is the key word used by most states to determine residency. In your case each of you may have separate domiciles. Again this indicates that filing separately may be the logical choice.

In the eyes of the law, a domicile can be a legal residence, the address from which one registers to vote, licenses a car, and pays income tax and where they plan to return.

If you do decide to file jointly, because your wife does consider herself a MN resident, then you may be eligible for a credit for taxes paid to another state.

State Returns - Assumes both states require income tax returns to be filed: Prepare the nonresident state first.

Report the sale in the state where the property resides.
Report it on your resident state and receive credit for taxes paid to another state.

Credit for taxes paid to another state is allowed by a resident state when the same income is being taxed to another state. Your resident state does not want you to pay tax twice on the same income. The credit that is allowed will be the lesser of:

the tax liability actually charged by the nonresident state, OR
the tax liability that would have been charged by your resident state

Re: How do I file?

max1112 — Sat, 08 Feb 2025 23:17:46 GMT

Thank you. She is a resident of Minnesota as of 12/16. How would I actually put this into Turbo Tax? The agent I spoke to over the phone couldn't figure it out, because on TurboTax it keeps assuming I also was a resident of North Carolina. She suggested I say I was a resident of North Carolina for one day. Is this a good idea?

Re: How do I file?

MaryK4 — Sun, 09 Feb 2025 00:08:03 GMT

You actually will use a Part Year Resident return for both states because your wife changed states. If you go through the state interview, TurboTax will ask you your dates of residence in Minnesota.

In the North Carolina section, you can indicate "made money in North Carolina last year, but never liver there."

Later in the interview, do not allocate any of your income to North Carolina.

@max1112