Non-resident or part-time

Forum|Forum|4 years ago
April 4, 2022
2 replies
29 views

My wife and I lived in DC from 1/1/2021 till 5/20/2021. She worked full time in DC. I did not work. We moved to VA on 5/21/2021. She continued to work for the DC employer. I did some remote contract work. Our Federal taxes are married, filing jointly. When trying to do our State taxes, Turbo Tax is recommending non-resident status for DC. Why would we be non-residents if we did reside in DC till 5/20? If I switch it to part-year resident, Turbo Tax is recommending Married, Filing Separately for state on the same return. Why would we file separate for State taxes? If I switch to Married, File Jointly for State, our tax owed jumps. Any suggestions on how to proceed? I am rather confused.

MaryK4

Level 15

You will want to file Part-Year Virginia and Part-Year DC. For DC, filing joint or separate has not impact since you had no income. Because your spouse worked for the same DC employer, she could file the income she earned in VA as a nonresident, then take a credit for taxes paid to another state on the Virginia return, or report it only in Virginia. (This is because of the reciprocity agreement- but either way there would be no particular advantage or disadvantage)

The Virginia Married filing Separate on the same return usually results in savings:

Each spouse must claim his or her own income. Income must be allocated to the spouse who earned the income and with respect to whose property the income is attributable. The key to receiving the maximum benefit is the allocation of exemptions and deductions. Careful consideration should be given to the allocation of any exemptions for dependents. As a general rule, those exemptions should be allocated to the spouse who has the highest income, particularly if that person's income is over $17,000.

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VballGirl66

Level 2

They are recommending nonresident of DC because you lived there less than183 days. It would seem your intent was not to establish residency but stay until you found other accomodations: Part-Year Resident
An individual is a part-year resident if he/she moves into or out of
DC during the year with the intent to establish or abandon his/her
domicile in DC. The calculation of tax liability for a part-year resident
is prorated based on the income earned in DC, during the period of
residency. An individual filing a part-year return must indicate the period of residency on Line 2 of Form D-40. All credits, exemptions and
deductions must be prorated according to the time of DC residency.

While you file jointly for federal, you are filing a joint return for VA but they allow you to reflect separate income and a reduction in tax by doing so. The maximum amount of the "Spouse Tax Adjustment" is $259 per the instructions.