Married couple living in different states, filing jointly. Spouse does not work. When filing her state return, it captures my W2 and says we owe money. How to avoid this?

[amukh]

@MarilynG1 Thank you for replying.

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@MarilynG1 wrote:

Yes, you can file as MFJ for your Federal return.

New Jersey requires that you file as MFJ if you filed as such on your Federal return (different states have different rules).

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Thank you for clarifying.

Do you know if MD has such a rule as well? Their website appeared to say something similar. 

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@MarilynG1 wrote:

You will be able to indicate the dates your wife lived in NJ, and also be able to either adjust your Federal income (subtractions from NJ income) to not include her Maryland income OR get credit for tax paid to Maryland. 

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So I will be able to adjust both our duration of dates lived in NJ separately?

Is there a way/tutorial I can look up to adjust income? How do you recommend I adjust the Federal income and/or get credit for MD tax? I was creating a mock up on the online Turbotax filing and there I filled up the Maryland taxes first, but then it would not allow to deduct any amounts/change from federal returns. 

I ended up trying to fill both MD and NJ as MFJ and claiming tax breaks from either state for taxes paid in the other, but I think that's probably not the right way to do this.

Fact: I lived in NJ for the whole of 2021, wife lived in NJ till 6/30/21, then MD for the rest of the year.

Just have to translate this in tax properly, which eludes me at this time.

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@MarilynG1 wrote:

She will need to file a Part-Year Maryland return as MFS.

I think, for this I will definitely need the PC software for the mockup MFS Federal return, as there is no way I can modify the online version to do this.

This has been very confusing at the moment. Please share if you have any other suggestions too.

[MarilynG1]

Yes, you should be asked the dates you lived in NJ and also the dates your spouse lived in NJ.  Her total income (or her total tax due on her income) will be adjusted according to the % she lived in NJ (different states handle it differently, but the net out is the same). 

It would be easier to see the calculations in TurboTax Desktop. You would then be able to review/edit directly on the forms. 

The only way I could see using TurboTax Online is for your MFJ Federal and New Jersey returns.

You wife could open her own TurboTax Online account to file as MFS for Maryland.

Unfortunately, you may need to do some calculations.  The % of  any other income (besides W-2) and deductions is split 50% for each of you, and then the %  of that 50% of these attributable to Maryland. 

Click this link some info on Allocating Income as a Part-Year Resident that may help. 

[amukh]

@MarilynG1 

Thank you again.

I would definitely try that out.

However, I also feel that just filing the federal return as MFS, both of us can basically file their returns as MFS, with only an NJ return for me, and a partial year NJ + MD return for my wife. That would be much simpler. And I think the tax savings would be similar given we only have W2 income and our daughter(who my wife could claim in returns). What do you think about that?

[RobertB4444]

Married Filing Separately results in a dramatic drop in available credits to you and your wife.  The child tax credit alone is a significant loss.

Married filing separately is best reserved for couples that are unable to file together because one has debts that will have their refund garnished or they are estranged.

[amukh]

@RobertB4444 

Hello, so I actually went through the motions of creating two separate accounts and preparing mock MFS for both me and my wife. Turns out, the sum of the Federal refunds equals to what we would have got if it were files as MFJ, this is including the child tax credits. As a bonus, now both of us are getting state tax refunds! I'm surprised myself with the result.

Do you think I should go ahead and file as such? In the future, when we are able to live together again (job?!) can we switch to MFJ?

Thanks.

[ThomasM125]

Yes, you can file as you mentioned for this year. You can file married-joint in the future, as each year you can decide to file married-joint or separate, no matter what filing status you chose in the year before.

[amukh]

Thank you.

At the outset, I had put in the address in MD for my wife as the present address.

So when I was filling up information for NJ state taxes for my wife, I had selected MFS obviously. Also selected "notify state of address change" and "change filing status" when starting out.  Turns out, in the end, it found an issue that it wanted to clarify. It actually was asking me for the NJ county/municipality code (39c in NJ1040-I looked it up). Surprisingly, it had filled up the Maryland address in the address section. There are no codes for non NJ locations. I did not select the homeowner/renter  tax rebate.

What should I do here?

If I just filled out the code where she lived for the part year and let the MD address stay, will that cause her return to be rejected?

Thanks

[ErnieS0]

No your return will not reject. The municipality codes are used for state funding. They don't do anything for your income taxes.

Since your wife is a part-year resident, enter the code of the last municipality your wife lived in,

[t131]

Hi everyone,

For 2021, my husband and I lived and worked in Virginia. Then I moved to DC in July 2021 but still worked in Virginia after the move. Please see if my steps below are correct and tax-efficient (save money). If not, please advise. I truly appreciate your help!

1. File MFJ for federal

2. Mock MFS for my husband with only his income and 50% deductions, then efile VA, not including MFJ or MFS

3. Mock MFS for myself with only my income Jan to June and 25% deductions, then efile VA, not including MFJ or MFS

4. Mock MFS for myself with only my income July to December and 25% deductions, then efile DC, not including MFJ or MFS

[DMarkM1]

Yes your filing statuses and allocations appear correct.  VA and DC have a reciprocity agreement so that you are only taxed on income by the resident state.  Additionally, I confirm both VA and DC allow the different filing statuses from your federal return status.    

[camdcama]

Hi Tax Expert,

For 2021, I lived in Massachusetts and my husband lived in California. We both have income and have house in both states. We have one kid in college in California. In our case, are these steps below correct and tax-efficient (maximize refund)? If not, please advise. Your help is highly appreciated! I am going to useTurboTax Premier.

1. Create an account using my name, file MFJ for federal

2. Create another account using my husband’s name, make a mock MFS for him with only his income and deductions for him and our kid, then efile CA, not including MFJ or MFS

3. Use account with my name, make a mock MFS for myself with only my income and deduction for myself, then efile MA, not including MFJ or MFS

[AmyC]

Yes, that is an acceptable option as MA allows a separate filing status and CA has special requirements which you meet to file MFS. However, be sure to save a copy of your MFJ return before making any changes. Instead of creating 2  accounts online, you may want to Install TurboTax Desktop software to save money. Desktop con is that only you have a copy of your returns while online keeps a copy for 10 years.

@camdcama

[camdcama]

Thank you very much for your answers and suggestion!

One more question. I bought a TurboTax CD from Costco, but do not have CD drive on my PC, so activated my TurboTax online by calling the customs services. Is there anyway that I could convert this online downloaded TurboTax into a desktop version?  Thank you. 

[MarilynG]

Your TurboTax download is the desktop program, where you have access to FORMS (upper right corner).

Here's info on the Advantages of TurboTax Desktop.

Also, details on married, but Filing Separate States to help you. 

@camdcama

[camdcama]

Thank you for the links, which are very helpful!

More questions about state filing. After I print state returns, do I need to attach a copy of my federal return (MFS or MFJ) to show how the state return is calculated? Thank you.