Spouse Domiciled in CO but Lived & Worked in DC 365 days - how to file

[netengler]

Per CO Dept of Revenue's definition, my spouse was 'domiciled' in CO in 2023 (maintained residence, voter registration, vehicle registration, spouse resided in CO, etc.) but he lived in a rented apt in DC for the entirety of 2023.  His non-military/non-gov't employer changed his address for state tax purposes to DC.   100% of his wage income for 2023 was earned in DC and taxed by DC.  I remained a full-time resident of CO.  I have pension income and together we have non-wage income (dividends, cap gains, CO rental property).   For state tax purposes, is he considered a Full-time Resident of CO and a Statutory Resident of DC?   If doing so, will we report 100% of all our income to CO and then get a credit for state taxes paid and still owed to DC?  Do we report any of his share of our non-wage income on his DC tax form?  And how to achieve this in TurboTax Premier for Desktop?  What a mess.  Thank you in advance for your help.

[MarilynG1]

Yes, he would be considered a Resident of Colorado and also a Statutory Resident of DC.  In the TurboTax interview, choose 'Full Year Resident' in the DC interview. 

On the next page, he can choose 'Married Filing Separately on Same Return'.  

Since you have TurboTax Desktop, you can subtract your non-wage income items manually on Schedule 1, if the interview screens don't prompt you.

CO will give credit for tax paid (or due) to DC, as you mentioned. 

You could also prepare a MFS 'mock' Federal return to transfer to  the MFS DC return.  

Here's more details on How to File a Non-Resident State Return and Filing Separate States. 

@netengler

[Edited 2/21/2024 | 12:10 pm]

[netengler]

MarilynG1 - Thank you for your quick reply!   Those links are very helpful.  My remaining concern is that, according to the DC D-40 tax booklet, given his 365 days living/working in DC, they seem to want to classify my spouse as a non-domiciled Statutory Resident and they equate that to a full-year resident who must report "his/her entire income for the taxable year".  CO also wants to classify him as full-year resident.  I don't think I can appease both states.  It would definitely be to our advantage to 'assign' his non-wage income to CO as their tax rates are lower.   

[MarilynG1]

Yes, choose Full Year Residency in DC.

On Schedule 1, you can subtract interest/dividend income, social security, and other items from DC income, so you can report those in Colorado instead. 

You may want to take advantage of TurboTax Live if you get stuck.

@netengler

[Edited 2/21/2024 | 12:14 pm]