I am a resident of NJ. My wife is a resident of Michigan. She had a net loss from her Daycare in MI. How do I keep this off of my NJ state return.

[KarenJ · Accepted solution]

The NJ tax instructions say this:

If during the entire tax year one spouse was a resident and the other a nonresident, the resident may file a separate New Jersey return. The resident calculates income and exemptions as if a federal married, filing separate return had been filed. You have the option of filing a joint return, but in that case, your joint income would be taxed as if you both were residents.  Page 15,http://www.state.nj.us/treasury/taxation/pdf/current/1040i.pdf