What filing status to use when spouses work in different states but live together

[Taylora1106]

I am filing as married for the first time this year. My spouse and I both live together in New York. I work in Connecticut and my spouse works in NY. In the past I filed taxes in both NY & CT- as a nonresident of CT. Can we file federal taxes with Married filing Jointly status and state taxes with Married filing Separately in our situation? Or do our federal and state filing statuses all need to match? Further, could we file both federal and NY taxes as married filing jointly, and then I alone just file CT taxes as married filing separately since my spouse is neither a resident or working in CT? What would be the best way to handle this situation for the best return.

[MarilynG1]

Yes, you can file as Married Filing Jointly for both your Federal and New York returns.

New York will tax all your income, as Residents, but give a credit for tax you paid to Connecticut on wages earned there.

Prepare your MFS CT return first, then your MFJ NY return.

Here's more info from CT Dept. of Revenue and also details on How to File a Non-Resident State Return.

[Taylora1106]

Thank you for the quick reply @MarilynG1 .

how do I use turbo tax to prepare CT as MFS and federal and NY returns as MFJ under the same account? Does it allow me to select two different filing statuses? Do I need to file my CT return before I can start the others? Turbo tax seems to start with the federal return information, so I’m unclear how to proceed. If I’ve already prepared everything, should I delete it all and begin again?

[AmyC]

1.You can't, you must have 2 accounts. One for MFS and one for MFJ.

2. You need to prepare CT, not file, to determine the tax liability and amount allowed as a credit for NY.

My thoughts and maybe helpful advice:

If it were me, I would see how much the CT tax is for joint before doing more. You can file MFJ for CT as nonresident and claim just the CT wages. CT prorates tax based on your full income for the year so you would pay a little more in CT tax to file jointly. Sometimes the hassle of an extra mock federal return is not worth the trouble and sometimes it is.

If you don't like the tax bill for married filing joint in CT, you need to create a second federal return of MFS and use that to create you CT return. Realize, paying for an extra filing may be more expensive than the tax difference. Take a look at the numbers and trouble and decide what works best for you.

Once you decide which CT return you want to file, you can finish your state return with the correct tax liability for a credit. If you are doing CT as MFS, you don't want to do it in your MFJ return, just add the credit against NY.

If you are using the online program, you have to create another profile and create the new MFS for fed and CT. If you are using the desktop version, you can add another return.