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Returning Member
posted Jan 23, 2021 8:30:12 AM

Married couple filling MFJ working in different states

Greetings, 

 

For 2020 both my spouse and I have income in different states and file MFJ; I understand that we have to file two state returns one to the state we are both residents of and apply the credit for my spouse’s income for paying taxes to a different  state. 

My question is when it comes to my spouse’s work state income and filing the nonresident state tax return; can we file this nonresident state return as MFJ and can I omit my income and dependents from my spouse’s nonresident state return but still file MFJ?

 

(The reciprocity agreement between states unfortunately does not apply to us)

0 4 3610
4 Replies
Level 15
Jan 23, 2021 11:51:29 AM

every state is different so tell us the state. 

Expert Alumni
Jan 24, 2021 3:49:50 PM

Yes, you can file MFJ.  Your total tax returns will include:

  • A MFJ Federal 1040 that will have both of your incomes.
  • A MFJ return for your resident state.
  • A state tax return for your wife in the state that she worked in.

You will get a credit on your resident tax return for the taxes your wife paid in the other state.

 

This may not be a dollar for dollar credit.

  1. If the non-resident state tax is less than your resident state you will get a full credit for the taxes paid to the non-resident state, but pay the additional tax amount in your resident state for your wife's income.
  2. If the non-resident state tax is higher than your resident state you will get a credit up to the amount of tax that would have been owed in the resident state on your wife's income.

Returning Member
Jan 24, 2021 5:02:53 PM

Thank-you for the response. We are residents of Illinois and my spouse worked in California. 

Expert Alumni
Jan 24, 2021 5:34:18 PM

Normally, California wants you to use the same filing status as what you use for the Federal Return.  And you still may file as MFJ for California, but you can also choose to file California as Married Filing Separate for your specific case, as shown on their website:  California Married Filing Joint or Separate

 

You'll note this statement on the site:  

 

"If you file a joint return for federal purposes, you may file separately for California if either spouse was one of the following (Italics added.  "Either spouse" is you in this case):

  • An active member of the United States armed forces or any auxiliary military branch during the year
  • A nonresident for the entire year and had no income from California sources during the year (Italics added.  Your spouse may file CA as MFS because you yourself had $0 CA income)"

 

Since you have the option on how to file for CA, you can choose the method that results in greater tax savings.  However, unless CA tax is higher than IL tax for your income, it won't matter how you file CA.  That is because IL taxes all of your income no matter where you make it, and will give a credit for the taxes you pay to CA on the income earned in CA.  (Chances are that MFJ will be better in CA also.  California will pretend that all of the income is taxable in CA under California law, taking into account deductions and credits applicable to the MFJ filing status.  Then, the tax is prorated to the income earned in CA).  And filing MFJ for California is much easier in TurboTax as well.

 

However, filing CA as MFJ is acceptable, and this Help Article shares how to do so:  How do I prepare a joint federal return and separa...