Weird MFJ/MFS Michigan-Virginia Issue

[KnnNike]

So I lived in Michigan all of 2019, my wife moved from Virginia to Michigan in November 2019. So we're planning to file as follows:

• MFJ Federal
• MFJ Michigan (requires same filing status as federal)
• MFS Virginia (required by VA, just my wife)

The problem is our Michigan refund. Right now in TurboTax, having a file with MFJ returns for Federal/Michigan/Virginia results in a Michigan refund of $3,916 (I have made sure that the Michigan income is allocated to Michigan, and the Virginia income allocated to Virginia). If I remove the Virginia return entirely from this file, I end up owing about $200 to Michigan.

I'm not sure why my Michigan refund is being affected by my Virginia tax filing. The way I see it right now, there are two approaches in Turbotax:

• File 1: MFJ Federal/Michigan/Virginia --> e-File Federal and Michigan, don't file Virginia
• File 2: MFS Federal/Virginia --> don't file Federal, paper file Virginia

OR

• File 1: MFJ Federal/Michigan --> e-File Federal and Michigan
• File 2: MFS Federal/Virginia --> don't file Federal, paper file Virginia

So I guess my question is whether or not I should be keeping the 'dummy' MFJ Virginia return in File 1. It seems to be helping me out quite significantly on my Michigan refund, but I don't know if it's accurate.

[MarilynG1]

Your wife should file a Part-Year Return to Virginia as MFS, since you didn't live at all in Virginia.  You are correct that you may want to mail this in. 

I am guessing that if you reported both of your incomes to Michigan (including Virginia) and reported taxes paid to Virginia on your Michigan return, that the Michigan tax on the same amount of income in Virginia is much less, or that you overpaid tax to Virginia.

Be sure you indicated in the the MY INFO section of your Federal return, that your wife 'earned income in another state'.

Click this link for more info on filing in multiple states.