One spouse is a full-year resident of NJ and the other is a part-year resident of NJ. Can we file MFJ for federal, but MFS for NJ?

[erin1788]

I am a full-year resident of NJ. Husband immigrated to NJ from foreign country on July 2019. Husband's income was earned only in foreign country prior to July and he did not make any income during the second half of the year, while a resident of NJ.

It was favorable to file MFJ for federal due to foreign income exclusion; however, when we try to file MFJ for NJ, we are being taxed on his income from Europe.

If we file MFJ for fed, can we file MFS for the state of NJ? The NJ tax website is clear that one non-resident spouse and one full-year resident spouse can file separately, but does not explicitly mention what to do for part-year / full-year spouses.

[TomD8]

If you file your federal return as MFJ, NJ requires that you also file your NJ return MFJ, unless:  1) one spouse was a nonresident and the other was a resident during the entire tax year, and both had income from NJ sources; or 2)   both spouses were nonresidents for the entire tax year, and only one had income from New Jersey sources.

https://www.state.nj.us/treasury/taxation/pdf/current/1040i.pdf

https://www.state.nj.us/treasury/taxation/pdf/current/1040nri.pdf

See this for an explanation of how NJ taxes part-year residents:  

https://www.state.nj.us/treasury/taxation/pdf/current/1040nri.pdf

[erin1788]

Thanks for your response! So in short, since my husband was resident for part of the year, we have to file MFJ for NJ if we are MFJ federal?

[TomD8]

Yes, that's the way the NJ tax instructions read.

[user17597544422]

quick question here - when filing mfj for New Jersey, should the part year resident be reporting income before they were in New Jersey?

[erin1788]

I’m the original poster. I am not a tax accountant but this is what we ended up doing. 

We reported the full income (foreign and US) of the part-time resident spouse in federal tax return. I called the NJ tax hotline and they told me for the NJ tax return, to file jointly but NOT to report the foreign income that part-time resident made before he was a resident.

It’s been a few years now but if I remember correctly, we filed the NJ return ourselves on the NJ tax website. It allowed us to upload any supporting documents. I included a letter explaining the situation and documenting the name of the person we spoke to on the phone who told us to exclude the foreign income. 

Note that this is for foreign income. If you were a resident of another US state, then there’s probably a different path to follow.