@ediben11
I really want to send you to an accountant, because there is a lot going on here.
Generally, you have to file your state tax returns, according to the same filing status as your federal tax return. If spouses live in two different states, it is often possible for them to file married filing jointly on their federal return, but separately on their state returns, although depends on the laws of the specific states. (It doesn’t matter where the income comes from, it matters where the spouses have their permanent residences.)
To amend two head of household returns into one married filing jointly return, would involve amending one of the federal HOH returns to married filing jointly by adding the other spouse’s tax information. However, certain adjustments will have to be made manually to account for any tax payments or refunds received by the second spouse. Filing the joint return will automatically cancel both HOH returns. Then, for the states, it sounds like you might be able to leave one separate return alone, but amend the other state HOH return to married filing separately.
You still haven’t described why you owe a large penalty, and it’s not clear that filing an amended return will change that and suddenly turn a penalty into a refund. Given the uncertainty, and the impossibility of anyone on this board, being able to give a answer that considers all factors without actually telling us all the factors, you may be better off to see an accountant in person.
