State tax help

[mickey1783]

I live in a state that is not the state I earn income in.  I am a 1099 contractor, but my husband is paid by w-2 (earned in the state we live in).  When I pull the info in to file taxes in the state I earned the income, it shows about double what I expected based on tax brackets ($3454 for $43k).  Why is the tax due so much higher?

[DanielV01]

What is the state involved?

[mickey1783]

I live in MN but made money in NM

[DanielV01]

Two things:  Minnesota requires you to use the same filing status as your Federal return (as a Minnesota resident) and also taxes all of your income.  Since you also must pay tax on the income you earned in New Mexico to New Mexico, Minnesota will give you a credit for the tax you pay to New Mexico on that income.  But that credit is limited to the amount that Minnesota will tax the same income.

We don't have access to your return or account to know exactly what you are seeing, but hopefully this gives some context.  You can certainly provide additional details with hypothetical numbers/information to provide you a more detailed response as well.

[mickey1783]

Thanks!  I did get a credit in MN, but the tax in NM is double what I was expecting.  My taxable in NM is 43k, with NM tax at 3400.

[DanielV01]

You might want to take a look at the form and see what might be pulling into New Mexico's return.  New Mexico is a community property state (like Wisconsin), and sometimes can treat spousal income as a combined asset to be divided equally between the spouses.  And if you were physically present in New Mexico for at least 185 days in the year, New Mexico requires you to file as a resident.  Check what is being reported on your return and see if this might be what is happening on your return.

[mickey1783]

That's what I was worried about, that somehow his income was being considered.  Neither of us lived in NM and his income was completely made in MN.  Thank you for the feedback.