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?

[puhrince]

Can I not have to file her state return (and delete it)?

[KittyM · Accepted solution]

If your spouse has no income to declare, you can delete her state return. 

Generally, if you and your spouse are filing a joint federal return but you work in or are residents of different states, you need to file separate state returns. Sometimes this is required by state tax law; other times it is to your best interest to not include your non-resident spouse's income on your state return. Otherwise both states may try to tax the same income. 

The calculations you need to do can be done in TurboTax online, but it is easier to do them with the desktop software.  And you can file up to 5 returns using the desktop software.  It will be tedious, but it is the best way to accurately minimize your taxes.

Please follow these instructions from TurboTax on this subject: 

1. You'll prepare one married filing jointly (MFJ) return to file with the IRS.

1. Prepare a "mock" married filing separate (MFS) tax return for each taxpayer. This is for your records only, and will be used to generate separate state returns for each person. The mock MFS returns are not filed.
2. Then for the first taxpayer, label and use the first "mock" married filing separate (MFS) federal return to prepare their state MFS return, using only their income and their half of the deductions from the MFJ federal return. This ensures that TurboTax only transfers the first taxpayer's income to their married filing separate state return. File this MFS state return, but not the mock federal return that it pulls the information from.
3. For the second taxpayer (spouse), label and use the second "mock" MFS federal return to prepare their state MFS return, again using only their income and their half of the deductions from the MFJ federal return.
   Again, file the second MFS state return, but not the second mock federal return that it pulls the information from.

Be sure to name each TurboTax federal return so you know the MFJ federal return to file, and which mock MFS federal and state return is for which person. 

Note:  State returns prepared using the "Mock" federal returns will require you to print and file your state return by mail.

[puhrince]

Thank you. I should have clarified - I have filed jointly so we had to submit 2 joint state returns (hence I can't delete an individual state return)..so can I delete one of the joint state returns (the state where she resides and does not work) so we are not taxed there as well? Since she does not work, I did not submit any income for her but Turbo Tax still showed we owed taxes in the other state.

[KittyM]

Yes, that will work for 2017.  In 2018 - if she works - it would be wise to use the "mock" method.  Save this thread!

[FaisalLinda]

Which desktop software? Cam you provide the link to purchase?

[TerukoL]

Please click this TurboTax Help link for the TurboTax product guide. 

[aajaxcomm]

Is there a way to prepare a mock separate federal and later have TurboTax change it to an MJF, or vice versa, to avoid re-entering?

[DavidD66]

Yes, you can start a return as Married Filing Separate (MFS).  If you want to be able to view the return or print it, you will have to pay without filing, but you can still make changes after you pay.  Once you are done with your mock MFS return, you can go to the My Info section and change your filing status, marriage status, and add your spouse.  All of your previously entered information will have been saved and you will not  have to re-enter.

[Dbrandibur]

My husband lived in a state where there are state taxes for part of the year then moved to my and state, while I lived in a state where there are not state taxes. Can we still use the method described in the answer to file jointly on federal and separate on state as I will not have a state tax return? If so is it done exactly the same as described in the answer here?

[LeonardS]

The following steps will allow you to file jointly on your federal return and file separately on your state return.  This procedure will work but you should consider if it is cost effective.

You and your spouse will prepare a federal return with filing status married filing joint, including both spouses’ information. File this federal return.

You will prepare a federal return with filing status married filing separate, including only your information. (Do not file this federal return.) Attach a state return to this federal return so your information will flow to the state return. File this state return.

You will prepare your spouse’s federal return with filing status married filing separate, including only your spouse's information. (Do not file this federal return.) Attach a state return to this federal return so spouse B’s information will flow to the state return. File this state return.

[bigbadone]

Clarifying question: I have read the thread and created a MFJ federal return and two mock MFS returns.  My wife, who lives in our jointly owned home in Oregon, must attach her federal return to her state return.  (She made no income other than dividends and distributions earned through our joint brokerage account.)  Should she attach the MFJ federal return in this case (even though the data is pulled from the mock MFS return and the MFJ return has all my income on it), or will this technique not work for Oregon?  Thanks, Bill

[KrisD15]

No, you can't use the "Fake" Federal returns for anything other than allowing the TurboTax program to do the math for the Separate state returns. 

Mail the Oregon state return with a copy of your joint federal return. 

[LWeiman]

Our scenario:

I work in a state that has no income tax

Husband works in a state that has income tax

We own homes in each state

How do we file federal taxes so that only his income shows on his state return?

[Jasonxuxin]

Hi:

Does this filing method also work for couples with double income but reside in different states?

[ajay4]

Hi,

i work in california and my wife study/work in nebraska. federal will be filing MFJ. but in both states can i file MFJ or MFS ? 

checked with California and nebraska state tax agencies, both said i can choose to file MFJ or MFS, which ever is more beneficial to me. is this true ?

if CA state MFJ, will i be resident or non resident ? turbo tax showing me as NR.

thanks.