Married Joint return - 1 spouse has Delaware income

[paul_1959]

Where is the option in TT to exclude?

[PattiF]

You will need to file a return as a non-resident for Delaware and report the income of the spouse.

The instructions from Delaware for a non-resident require that a return needs to be filed if there is any gross income during the tax year from sources in Delaware. Delaware does not have reciprocity with any state.

[paul_1959]

Thanks for the reply - but that’s not the question- the pa income is getting included in the Delaware return - the pa income is from a pa resident not working in de therefore should not be subject to de tax 

[AnnetteB6]

The Delaware non-resident tax return uses the Federal income from any state or source as part of the calculation to determine the Delaware taxable income.  The Delaware taxable income is a prorated amount of the total income from your Federal return based on the income from Delaware sources versus the Federal income.

You will not be able to exclude the Pennsylvania income from being included as part of the Delaware return.  

@paul_1959

[paul_1959]

To clarify - both residence in pa - one works in Delaware (& would understand owe tax in de) but the other spouse lives & earns income in Pennsylvania- if income is earned in pa why would that income be taxable in Delaware?

[DMarkM1]

Only your DE earned income is taxed in DE.  DE just uses all income from all sources to get the ratio of DE income to FED income.  That ratio is then used to multiply by the DE tax on all income to arrive at the correct DE tax. 

You will only be taxed by DE on a percentage of your total income. 

For example your DE income is $1000 and your total income (FED Adjusted Gross Income) is $10,000.  The rate is 1000/10000 = .1 

The DE tax on 10,000 of income is $10 multiply by the income ratio (.1 ) to arrive at $1 DE tax on 1000 DE income.