Married, living apart, filing jointly

[liava]

My spouse and I live in separate states (she lives in NC and I live in CA). It's beneficial for us to file jointly in California since she has minimal income. The ideal outcome for us is that we file jointly federally and in California, and we file separately in NC because I'm not a resident there (NC doesn't require non-resident spouses to pay income tax, as I understand it, as long as they have no NC income).

My spouse does come to CA with some frequency, but not enough to meet the residency requirements, and she has no income in CA. What income she has, it's fine for us to subject that to CA tax.

I've been able to find all sorts of information online about how to avoid being treated as a resident in California, but I haven't been able to find much information on how to ensure she is treated as a resident in CA. I think, since we're married, we can file jointly in CA as residents even though she primarily lives in NC, but I'd like to double check.

[RobertB4444]

California doesn't have a set number of days to be considered a resident.  But filing a joint federal return and a joint California return and then a non-resident return for your spouse in North Carolina is a start.  Although North Carolina may have issues with it since she earns income there and it sounds like she's actually there more than she is in California.  Either way, the California FTB provides the following - 

Guidelines for Determining Residency 

The underlying theory of residency is that you are a resident of the place where you have the closest connections. The following list shows some of the factors you can use to help determine your residency status. 

Since your residence is usually the place where you have the closest ties, you should compare your ties to California with your ties elsewhere. In using these factors, it is the strength of your ties, not just the number of ties, that determines your residency. This is only a partial list of the factors to consider. No one factor is determinative. Consider all the facts of your particular situation to determine your residency status. Factors to consider are as follows: 

• Amount of time you spend in California versus amount of time you spend outside California. 

• Location of your spouse/RDP and children. 

• Location of your principal residence. 

• State that issued your driver’s license. 

• State where your vehicles are registered. 

• State where you maintain your professional licenses. 

• State where you are registered to vote. 

• Location of the banks where you maintain accounts. 

• The origination point of your financial transactions. 

• Location of your medical professionals and other healthcare providers (doctors, dentists, etc.), accountants, and attorneys. 

• Location of your social ties, such as your place of worship, professional associations, or social and country clubs of which you are a member. 

• Location of your real property and investments. 

• Permanence of your work assignments in California

(You can get that document here although you have to enter your email address and have it emailed to you.)

@Iiava

[liava]

Thanks for getting back to me.

I wasn't clear enough in my question about NC residency, so let me clarify that here. The plan is for my spouse to file a state return as a resident of NC, but file as married, filing separately. In CA, we plan to both file as residents jointly.

[DawnC]

The only problem with your plan is that North Carolina requires her to use the same filing status as used on her federal return, which would be Married filing Jointly.   

[DawnC]

Actually, there is an exception in your case.  Couples who file a joint federal return and one spouse is a nonresident of North Carolina and had no North Carolina taxable income may file: (1) a joint North Carolina return or (2) the spouse with the North Carolina taxable income may file a separate North Carolina return. Taxpayers who choose to file a separate North Carolina return must attach a separate federal return or a schedule showing the computation of separate federal taxable income to the North Carolina return.

[liava]

Thanks again to both of you for answering.

I found the exception for non-resident spouses in NC law, so I wasn't so much worried about that either. My primary concern is that California may deem her to be non-resident when I'd much rather she be treated as a resident for tax purposes. It does mean she'll have to pay taxes on her income in both NC and CA, but that's a much better deal for us because of the income disparity. As long as it's OK for her to be a resident of both states for tax purposes, then I think this plan is fine.