My husband lives in Texas and I recently (October) moved to Hawaii. What is the best way to file. He is retired military and receives retirement and 100% disability. He is currently unemployed but I work in Hawaii. The state taxes in Hawaii are very high and take out a big chunk of my income. Initially I put on my W2 married filing separately but changed it to married. Can I claim him as a dependent to reduce some of the Hawaii state tax. Or would that cause me to owe on my taxes when I do file. Can I also put myself as a dependent. I want to know what my best option is to be able to afford to live here and still not owe on my taxes.
If you husband has income outside of his disability and military income, you may find the best way to file your Hawaii return would be as married, filing separately. If you file a joint return with your husband you would have to include his income from all sources. His disability and military income would not be taxable, but any other income he receives could be taxable.
On the other hand, if your husband has no other income, then filing as married, filing jointly would be best since Hawaii does have a small exemption for each taxpayer and the state's graduated tax rates favors married, joint filers over single taxpayers for the same amount of taxable income.
Unfortunately, neither you or your husband can be listed as a dependent on any return that you file.