Husband is active duty and not a resident of NC. But the state taxes are requiring him to enter residency information. Any advice?

[klqueenie]

Turbo tax will not allow me to file our state taxes separately.

[SteamTrain]

This may take some time.......

For a mixed residency couple....some states require you to prepare a MFS-Federal tax return before preparing a MFS-State return.....Even if you are going to file MFJ-Federal.

But for a few states, like NC, you can prepare a MFJ-Federal tax return and the State section will transition to the NR/Part-Year state forms so that you can effectively file MFS-NC in the state section.  

Whether you can do that for the military member's state, depends on what state his State of legal residence (HOR/SLR) is set as......and how you are attempting to file.
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1)  If you, the civilian spouse, did not work...then you can delete the NC form entirely and file MFJ-Federal and MFJ for his state (if his is an income taxing state.)
2)  IF you did work, are you sure you are considered an NC resident, and perhaps not also considered a resident of his state too (state protected under MSRRA).  This can go either way depending on your situation..when&where married, etc, etc...but has to be asked.
3)  What is his state.....and are you working with a MFJ tax file with MFS states?....or attempting to prepare separate MFS-Federal +MFS-State tax returns?

[klqueenie]

His state is TX so there is not any state taxes.  I am a working spouse and do not qualify for the Spouse Exemption, therefore NC is my resident state.  The problem is, TurboTax is not giving me the option of changing how we file our state taxes.  It is requiring us to file it jointly vs. separate.

[SteamTrain]

I'll have to look at the Online tax forms for NC later this morning for that situation (I use desktop, but have some online test files to work from).

The NC tax forms should be an MFJ-NC tax form...BUT, in the NC income section, you just need to run thru all the income allocation questions, it "should" allow you to tag his W-2 as NOT NC source income, and on subsequent pages, break out the sub-portion of Federal income that is yours (just use half...unless you have completely separate accounts for banks and investments).  But I'll have to look at what the Online software does.   It is always somewhat confusing in your situation.

[SteamTrain · Accepted solution]

Try again:

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NC Resident & Other Person's State Nonresident

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Yes...it's messy and I don't like the way the interview goes....but I can't change that. I'm going to complain to TTX as to how this is working/not working, but ai don't see much chance they will change it this year.

The Online interview works the same way as the Desktop interview..I'm showing the desktop interview in my pictures below.

I've also set this up as each spouse having half their total Federal income..just to check the multipier in the NC state software.  Yours will be different, and not likely 50-50.

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1) You Each indicate your Proper resident state in the Personal Info section....you did NOT move during 2017.

2) Put in every scrap of info in the Federal section first...don't even think of going into the state interviews until everything has been entered in the Fed section.  (OK...You can, but if you do change anything in the Federal section, you have to repeat the state section all over again.

3) First you need to go thru the full state interview again (picture 1)

4) Did you make money in NC in 2017, but never live there?.....NO

5)  What was your State of Residence in 2017 (picture 2)

..........Military TX person, select ....."xxxxx made money in NC last year, but never lived there"

..........NC civilian spouse, select......"Just North Carolina"

I KNOW !...Parts of that are not quite right...but it's the only way you can get the forms to show properly with military member as non-resident, and Civilian spouse being resident.

6)  What County (for the NC resident)

7)  Answer intervening page(s) as appropriate

😎  Next page (Picture 3) : "Here's the income that NC handles differently"...if anything applies to you on this page...deal with it..but then hit  "Done with income"  (you aren't...but that's what you do).  The "Miscellaneous" additions or deductions are unusual items you likely do not have..click the "Learn More" to see if anything applies...but I doubt it.

9)   Next page (Picture 4):  "Wages Allocation".  Mark the two spouse's W-2 according to whether it is NC income..or not.  Here is where you take out the Military NonNC-Resident's W-2 income from the Military.  IF TX Military person worked off duty on a civilian job in NC..then that W-2 is "NR-NC Source Income"

10) Instruction page...then  (Picture 5)......You indicate what sub-portion of the Federal income is NC taxable in the "North Carolina Income While Nonresident" column. What goes into the first box is a "zero"!! Since you've already indicated how your W-2 forms are to be taxed...for the next boxes, IF you share accounts with your husband, just enter half of everything.  If you have your own separate accounts, you enter whatever $$ are from your own accounts, plus half of whatever is in shared accounts.  Yes ..it is your "resident" income, but it's the only way to get these amounts properly into it as NC-taxed income.

 NOTE: The "North Carolina Income While Nonresident" is usually all zero's.....(with some execeptions if you two ran a self-employment operation, or owned a rental property located in NC).

11)  Step thru the rest of it, then print out a copy.  (Picture 6) On the NC D-400, ALL your combined MFJ income (with minor adjustments) should show up to line 10.  

NC itemized or Std Ded results in line 12, your total taxable income for everything....both of you.  

Finally, Line 13 is the decimal multiplier that reduces the total NC taxable income according to what sub-portion is really being taxed by NC.  Make sure this make sense.  In my example , I set it up as each spouse having half the family's income...so my multiplier is 0.5.

Thus, line 15 is the tax assessed on the lowered NC-income in line 14.

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Work thru it, print everything out, then go back and re-edit and adjust as needed.  Plan on spending several weeks working on it every few days.  Look at the D-400,Sch PN to see how things are being divided.

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[klqueenie]

Thank you so much!  The verbiage being used is different from previous years and it was confusing me!  Thanks again!

[SteamTrain]

Deleted

[SteamTrain]

Removed it because the interview still  isn't right. and the NC forms get messed up in other ways.

I've been thru this before, and I just don't like the way the software is set up.