My domicile is MD, wife's is CO. She has no MD sourced income. Can we use MFJ for MD without filing the pro forma MD 505?

[teekay21]

My wife and are separated. My domicile is MD, hers is CO. She lived there during all of 2020 and purchased a condo there last October.  She has no MD sourced income. Can we use MFJ for MD without filing the pro forma MD 505?  We would file MFJ federal and MFJ  for CO.  I believe we would pay CO tax only on her income (which is much less than mine).  The lowest MD tax seems to result from filing MFJ, with no pro forma 505 calculation, and claiming a credit for tax paid on her income to CO.

Per MD Income Tax Administrative Release #3: 

This requires special guidance for a nonresident with income from Maryland sources who has a Maryland resident spouse and files a federal income tax return using a filing status of “married filing jointly.”   ... 

If the nonresident chooses to file a joint Maryland return with the resident spouse, a pro forma Maryland nonresident joint return must also be completed and submitted as an attachment to the Maryland resident return.  -- So, does this apply if wife had no MD income??

[ThomasM125]

The quote you posted says the non-resident spouse has income from Maryland sources, which she doesn't, so it wouldn't apply to you. You can just file as married-joint and take a credit for taxes paid to Colorado. No form 505 would be necessary then.

[teekay21]

Yes, that's how I read it.

I did  quick-and-dirty calculations of the tax with and without the pro forma 505.  In my case the rate based on the 505 calculation seems to increase my MD tax by more than 25%.  Married filing separately would be cheaper than MFJ with the 505 ... but still more than plain old MFJ with no 505.