What county of residence should my nonresident spouse, who is being treated as a US resident for tax purposes, select for our state taxes? (My spouse lives in Europe)

[Nate47]

I am electing to treat my nonresident spouse as a US resident for tax purposes (we got married last year and want to file jointly).

For our federal tax return, everything is taken care of. Now, I am working on our state tax return.

I am being asked what my spouse's county of residence is. My spouse lives abroad and has not been in my state (except for a few days in January 2022). Since we are electing to treat her as a US resident, should her county of residence be the same as mine, or should I select "Out-of-state - OTHER STATES?"

Alternatively, I could select "(no entry)," but this throws up a red flag in TurboTax.

Thank you very much for any help/guidance.

[ErnieS0]

Yes. Choose “Out-of-state - OTHER STATES?" unless there is also a choice for foreign. This may create a nonresident return.

Some states require you to use the same filing status as federal, so if you are filing a joint federal return, then you will have to file a joint state return and include all her income.

Other states allow you to file separately if one spouse was a nonresident of that state for the full year.

Even if you are filing jointly, it may be better to file a joint federal and separate state, if allowed, to exclude her income.

HOW DO I PREPARE A JOINT FEDERAL RETURN AND SEPARATE STATE RETURNS?

[Nate47]

Dear Ernie,

Thank you very much for your message. A quick Google search revealed that in my state, I must file a joint state return if our federal tax return is filed jointly.

There are no foreign options for the county selection dropdown box, Just "(no entry)" and  “Out-of-state - OTHER STATES".

A note I will make is that I called my state's department of revenue last week and they said that there are country codes that can be entered into that box (my guess is I could do this if I was manually filling out my tax return with a pen). I don't see this option in TurboTax. Happy to hear your thoughts on this if you have any.

For now, I will default to selecting the Other States option.

Thank you again.

Kind regards,

- Nate

EDIT: A new questionnaire that had not been presented to me last week has appeared in TurboTax which seems to clarify the situation (see photo). It offers "Other Country" as an option.

[ErnieS0]

Yes. "Other country" will work fine. If your state has specific country codes and you file by mail you can white out and enter those manually.

That's not necessary. I suspect the specific codes are for state record keeping. States almost never have tax treaties with other countries, so your nonresident spouse's specific country of residence will not impact the state tax return.

You can find a summary of U.S. tax treaties at United States Income Tax Treaties - A to Z.

[Nate47]

Thank you, Ernie! You have been most helpful.