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What are the pros/cons of filing separate or joint if husband is MI resident with home and wife is FL resident with a house that sold at no profit now living in apt?

My husband lives in Michigan and owns the a home (for 6 years).  I am still a Florida resident due to my job and just sold my FL house in June but still live there majority of the time in an apt.  We have been married for a year and a half now.  Last year we filed completely separate.  Is that what we should do this year as well or file jointly?  What are the pros and cons?  I do make more money than my husband and FL doesn't have state income tax but MI does.

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1 Reply
DS30
New Member

What are the pros/cons of filing separate or joint if husband is MI resident with home and wife is FL resident with a house that sold at no profit now living in apt?

You may still want to fill married filing separately for states if you recognized a gain on your FL house sale (since you will not have a state filing in FL for this sale but may have to include it on a jointly filed MI state return.

Another con would be that if your income (in FL) is higher than your husband's income (in MI), the marginal tax rate on your FL income might be too high to offset any benefit for filing jointly in MI.

For your FL home sale, for federal income tax purposes:

You can take the gain exclusion as long as you considered the home your "primary residence" for 2 of the last 5 years. If you have a capital gain from the sale of your main home, you may qualify to exclude up to $250,000 of that gain from your income. You may qualify to exclude up to $500,000 of that gain if you file a joint return with your spouse

If you did not use the home as your primary residence for 2 of the last 5 years and meet the home gain exclusion requirements, you may still be eligible for partial exclusion if you can show the main reason you sold your home was because of a change in workplace location, for health reasons, or because of an unforeseeable event

See this IRS link for more information on the exclusion:

https://www.irs.gov/taxtopics/tc701.html

Here is some information about filing jointly for federal and separately for states. (To expand the answer, select see entire answer)

https://ttlc.intuit.com/replies/3301995

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