My husband and I got married last year and this is our first year filing taxes as a married couple. We both live in RI -- I also work there, but he works in Massachusetts. We planned to file our federal return as Married, Filing Jointly. How do we need to file our state taxes --- RI Jointly, MA Separate? Both Separate? Both Jointly?
We started off filing the states separately, but Massachusetts asked for information about my income and then made us provide an explanation of why my income wasn't included as part of the filing. (More than 10% difference between our combined income vs what was being used for the state tax income which would have been my husband's only). This made me rethink whether we need to be filing jointly or not?
you are doing your state returns incorrectly. since you are both residents of RI, it taxes you on all your income including the income earned in Mass. it then gives you a credit for part or all of the taxes you paid to Mass. the Mass return must be filed as a nonresident and the only income reported is the Wages earned in Mass (unless you have other income that can be sourced to Mass. so that your state returns come out correctly you must do Mass first so the proper credit is calculated on RI.
I know we need to file all income with Rhode Island (with a credit for taxes paid to MA) and to file in MA for that income....my question was more around if it would make a difference to do it separately (husband separately in MA + joint in RI or file all 3 as separate --2 RI and 1 MA) or jointly for both states (and claim my income as non-MA income for the nonresident return)
I've since learned that since we are both residents that our RI return must match our federal return from a filing status standpoint. After running both scenarios for both state and federal in TurboTax, it seems to make more sense for us to file separately for both.