Married But Living in Different States. Filing Federal Jointly but State Separate?

[Knighton]

Hello, my wife and I got married in May of 2023, but live in different states. She lives in PA and I live in NJ. I don't see an option in TurboTax to file Federal Married Jointly and then file State Married Separately. Can someone shed some light on this for me and guide me? I cannot find any other topic/question about this subject.

[MalePritch]

If you are both earning income in different states then each of you must file state income tax separately in the state you earn it in. (If that state has an income tax).

[Knighton]

We both live in different states (NJ/PA) but both earn income in PA. When I did my state tax refund, it said we owed thousands of dollars which is where I found the issue. Is there an option in TurboTax to file jointly federally and separately state-wise?

[MalePritch]

So PA does tax resident and non-resident income so you can file jointly in PA but you also may need to file in NJ (where you live?) because ou are bringing the income there.  You will need to contact  NJ revenue dept to see if you need to file there since you are a resident earning income outisde the state but bringing it "home".  That part I can't answer.

[Knighton]

Thank you very much for that detailed answer! Ugh, looks like it'll be trying to contact them during office hourse (when I work...) and trying to figure this out quickly. I wish things were much simpler, I mean seriously.

[AmyC · Accepted solution]

Your federal is easy with MFJ. You both have income in PA,  Did you fill out REV-419 so that only NJ tax was withheld or was PA tax withheld? NJ and PA have a reciprocal agreement.

I am going to assume that you had NJ tax withheld since you live there and your wife had PA tax withheld.

NJ and PA also understand that you could work in one and maybe live in one or two states. PA will allow you to tax all income and then NJ gets a credit for the portion earned by you in NJ. See more here.

For NJ, as a resident, you must use the same filing status as federal. You will mark your spouse's income as earned out of state to qualify for a credit against your NJ return. See NJ instructions here.

In plain language you need to:

enter federal MFJ

prepare PA resident  MFJ to create the tax lability

prepare NJ resident MFJ showing only your resident  NJ income since it was all from PA. Get a credit for tax paid to PA

[Knighton]

Amy...thank you very very very much. The links to the reciprocal agreement and the document (REV 419), and that very detailed explanation makes sense to me. Filing jointly will make everything easier, I'm going to redo my work and come back. And hopefully, help the next person. You have no idea how much I appreciate this