Married couple living in different states, filing jointly.

[garrapatta]

Hello, 

In 2021 we lived in different states. I worked in California, my husband worked only Dec of 2021 in Utah and received some unemployment from Utah. He was part of the year in school in Utah and California. He never was considered a California resident. 

We want to file MFJ for federal, but I am not sure how to do our state returns. I am using Turbo Online Deluxe (I own a home in Utah that I rented for 3 months). Please advise how best file our state taxes. I read that California does not allow to file separate state returns. Any advice would be appreciated. 

[ThomasM125]

Since one spouse was not a resident of California, you can file separately for the one who did, while still filing married-joint on your federal tax return.

You can do the same in Utah if the spouse who worked there was a resident of Utah for the full year. I assume this was the case, since you said he was never a California resident. Otherwise, you would have to file married-joint in Utah.

To do this in TurboTax, you may find it advantageous to purchase the desktop version of the program so you can do multiple returns using the same product.

You can start your return using the online TurboTax so you can transfer in information from the previous year. You will see on your left menu bar an option for Tax Tools, and then Tools. Then, look for the option to save your return to your computer. Then, purchase the desktop TurboTax program and download it to your computer and pull up your tax file you downloaded and you can complete your return.

To file the state returns as separate, you will need a federal return prepared as filing married-separate. So, you will need two married-separate federal returns for each state return and then a married-joint return for the federal. You file the federal and both state returns separately.

Here is a link to the TurboTax download program:

TurboTax download programs

[garrapatta]

Thank you so much, ThomasM125. With the desktop version, will I still be able to file the state returns online? 

[ErnieS0]

No. You will not be able to e-file your state returns. The e-file system requires matching federal and state returns. You can e-file the states if you file separate federal returns.

How do I prepare a joint federal return and separate state returns?

Before you start the process of downloading your tax file and creating separate state returns, check out filing together. You can start states for free in TurboTax Online and delete them before you file.

It looks as if your husband did not make much money in 2021. Unemployment is not taxable to CA and you'd be adding one month's UT income to the CA return if you file together. You can claim a credit for UT tax on UT income.

You may both have to file UT returns because you have rental income and your husband has wages and unemployment (which is taxable in UT).

It may be best to file joint in Utah. You can claim a credit for tax paid on both your UT incomes if you file a joint CA return or just the rental income if you are just filing a separate CA return.

[garrapatta]

Thank you for your advice. The rental income was only for 3 months, not the whole year. The mortgage under my name. My husband worked only for a month in Utah and received Utah unemployment for a few months. Would it still be better to file joint in Utah? 

[ErnieS0]

An accountant would need to see all the numbers to tell you whether it would be better to file joint or separate state returns.

You can speak with a live Tax Expert: How do I connect with a tax expert in TurboTax Live? 

You can also create additional free married filing separate accounts in TurboTax for California and Utah to see much you would owe to each state and compare that against your total tax state if filing together.

You won't be charged unless you print and file a return (or e-file two separate federal and state returns).

[garrapatta]

Ernie or whoever can help, 

So I crunched some numbers. I used Turbo Tax online to see different outcomes. When we file MFJ federal, of course we get the biggest refund than filing federal separately. My question is about the state returns. I crunched numbers Turbo Tax online separately. When we file California based on MFJ federal, we get $2000 refund, if I file MFS, I actually owe CA some tax. When I crunched my husband's Utah MFS federal, his state is much bigger than if it is based on our MFJ federal, it's $500 if separate and only $70 if jointly. 

MFJ Federal:  CA $2000, UT$75 

MFS Federal: I owe CA taxes; my husband gets bigger refund

I have the downloaded version of Turbo tax but decided to play numbers online. 

Questions:

1. Can I file MFJ Federal AND file CA jointly (refund bigger than separately), but file UT return separately because my husband gets bigger UT refund if MFS. 

2. Will the downloaded version allow me to file CA return jointly but UT return separately?

3. How do I file also UT return for myself in the downloaded version? I rented a house I own for 3 months in 2021. 

It is a lot of information, but I really appreciate your help or anyone who is reading. Thank you!

[ErnieS0 · Accepted solution]

Yes. You can file joint federal and California returns and separate Utah returns.

UT says a married couple who files a joint federal return may file separate Utah returns ONLY IF:

• one spouse is a full-year Utah resident, AND
• the other spouse is a full-year nonresident.

You will prepare three tax files in TurboTax CD/Download:

1. A joint federal and CA return
2. A mock MFS UT for your husband
3. A mock MFS UT for you

Special Instructions for Married Couples

You'll need to manually tax the credit for UT tax paid to CA. California needs a copy of the other state returns for the credit so you'll have to mail CA with a copy of each UT return since you can't e-file the UT returns with CA. 

You can e-file federal.

[garrapatta]

Thank you so much! 

[garrapatta]

Hi, Ernie, 

You said: You'll need to manually tax the credit for UT tax paid to CA. California needs a copy of the other state returns for the credit so you'll have to mail CA with a copy of each UT return since you can't e-file the UT returns with CA. 

To make sure I understood you, I will need to mail both my and my spouse's separate UT returns to CA Tax Commission? Again, why is that?

[DianeW777]

You need to mail the California (CA) tax return with a copy of both UT separate returns to show CA that you did pay tax to Utah (UT).  This allows the credit for taxes paid to another state on the same income since you are filing jointly in CA.  CA will then accept that you are entitled to that credit which reduces the overall tax on the CA return.

[garrapatta]

Thank you, Diane