Other Tax Questions
Questions and comments on other topics covered in Fairmark.com, such as UTMA accounts, and any tax questions that don't fit our other categories.
Wife and husband live in different states - how do we file?
Posted by: Foros, February 11, 2009 05:54PM
In 2008 I began to work and live in CA (most of the year), wife and kids still live in NJ (for now). We own a home in NJ, have a mortgage and pay real estate tax, and have interest income and cap gains from jointly held accounts. We are (happily) married and plan to file our federal return jointly.

Questions: Do we file a joint part year resident return for NJ and one for CA as if we both moved? If the situation stays the same this year, would we file just a CA resident return in 2009? If my wife starts working in NJ, how would we file in each CA and NJ (resident/non-resident, joint/separate)?

Thank you in advance.

Re: Wife and husband live in different states - how do we file?
Posted by: Drewremedy, February 11, 2009 06:39PM
In terms of Federal return I suspect a joint return is more tax efficient.

But you may need to check out just how CA treats worldwide income of a married couple if the nonresident has (in future) some hefty income. CA is a community property state and in the past CA has been noted for position of wanting to tax everything (NY has same view) I do NOT know how CA shakes out but I'd sure check it before I filled in too much information.

EG If you had hefty capital gains from a joint account--NJ might say we want taxes on 1/2 and CA might say we want taxes on whole ---and I frankly don't know. (My state of PA has some very quirky rules and sometimes the rules of one state make no sense in light of other state rules--so all I know is to look first!) I doubt NJ is the problem--but CA gets greedy!

Re: Wife and husband live in different states - how do we file?
Posted by: goose, February 12, 2009 04:21AM
I have a similar but not same situation.
A married couple with one child.
Husband owns a residence in New York - lives and works in New York
Wife owns a residence in Massachusetts - lives and works in Mass. with son.
What I wind up doing (and the tax software seems to make it work each year) is MFJ for all three returns - except for states - where I report part year residents for reporting income allocable to each state.

Re: Wife and husband live in different states - how do we file?
Posted by: LJM, February 12, 2009 12:46PM
The Foros NJ situation is covered on pages 4-5 of the NJ Non-Resident Return instructions: [www.state.nj.us]

Page 5 indicates that you have the option of filing a full year NJ married filing joint resident return.

You also have other options including filing MARRIED FILING SEPARATE NJ returns (part year resident - part year non-resident as applicable) even though you file a joint Federal return.



Lewis

Re: Wife and husband live in different states - how do we file?
Posted by: Drewremedy, February 12, 2009 01:11PM
The issue is to check CA as well!

One of my friends ran into situation where his state/city wanted to tax ALL the family income even though his wife never had a presence in that state/city and his wife had a hefty separate income.

Hint/Also--because of some of the quirky state rules I might also look at unwrapping some joint holdings and if possible only recognize gains/losses in the state with the more advantageous rules.

Unlikley in your case---but I maintain homes in two states--under some fact patterns if spouse used one state and I the other as residence for state reporting we could "homestead" BOTH and get state tax breaks for both. Facts don't shake out that way for me--but they do for some folks

Re: Wife and husband live in different states - how do we file?
Posted by: goga03, December 27, 2009 04:59PM
Dear goose or anybody else,
I have a “technical” question about TAX software. Since I have and identical situation hope you can help. Husband lives and works in MA, and wife works and live with kids in NY.
My TAX software (I use TaxAct) asks for only for one address when you start federal return. My thinking is that based on this address it files state return as well. Is it correct?
Couple of questions…
How your software deals with this? Where do you give different addresses for husband and wife?

thanks

Re: Wife and husband live in different states - how do we file?
Posted by: goose, December 27, 2009 06:51PM
I use UltraTax and use the husband's NY address for all returns.

Re: Wife and husband live in different states - how do we file?
Posted by: tomd37, December 27, 2009 09:12PM
Be careful in any decision to file with married filing separately (MFS) filing status. In most cases married people end up paying more in federal taxes when using this filing status instead of married filing jointly. You give up many tax credits filing MFS.

Tom D.

Re: Wife and husband live in different states - how do we file?
Posted by: Art, December 27, 2009 09:47PM
And with MA and NY residents, that's certainly true.


Ohio residents however are often much better off filing separately.

That's because Ohio state income tax

i) is steeply graduated,

ii) has just one tax table regardless of filing status
(although a joint filing credit soothes the pain only slightly)

iii) allows a $200 retirement credit per return,

iv) allows a $50 senior credit per return,

v) is not a community property state,

vi) requires filing the same way on Ohio as federal.


So if you do not have some of the features that makes it costly to file
separately on the federal, such as EIC, Child Care Credit, Education credits/deductions, have less than 85% of social security taxed, deduct IRA contributions, Medicare B surcharge, etc, but have features than make it worth filing separately, such as large medical or miscellaneous or casualty deductions, being just over the Child Tax Credit cliff, or file an OH return, consider filing MFS.


for convenience
Posted by: jainen, December 28, 2009 03:12AM
>>based on this address it files state return as well<<

It defaults to that state for convenience, but there is no reason you can't use a different mailing address while filing any and all states necessary.

If you want to track separate addresses for husband and wife, consider purchasing software that has more features.


Re: Wife and husband live in different states - how do we file?
Posted by: PatMcNJ, March 29, 2010 12:51PM
Hi, looking for help with this topic. Husband lives and works in Las Vegas, wife lives and works in NJ. (husband has lease on apartment, registered car, etc in Nevada). NJ seems to require us to file joint, if we file the federal return jointly. I think I just file 2 NJ state returns, one resident for wife's income, and one non-resident, listing husbands income, but showing none was earned in NJ. The other option would be only filing the resident return, and only listing the wife's income. Or, there could be a third option, I do not know about?

Thanks!!!

PAT MC

Re: Wife and husband live in different states - how do we file?
Posted by: LJM, March 29, 2010 02:22PM
My opinion is that you have two choices, whichever results in a better tax situation for you:
1. File a joint NJ-1040 Resident return as "Married Filing Joint"
2. File two NJ returns as "Married Filing Separate":
a. Husband filing NJ-1040NR (even if no NJ source income and ZERO tax)
b. Wife NJ-1040 resident return


The following is from page 5 of the 2009 NJ-1040NR Non-Resident Instructions:
"If one spouse/civil union partner was a
nonresident and the other a resident of
New Jersey during the entire taxable year
and both had income from New Jersey
sources, separate New Jersey returns may
be filed (the nonresident
files a nonresident
return and the resident
files a resident
return). Each computes income and
exemptions as if Federal married, filing
separate returns had been filed. You have
the option of filing
a joint resident return,
but remember, joint income would be
taxed as if both were residents."

Lewis

Re: Wife and husband live in different states - how do we file?
Posted by: PatMcNJ, March 29, 2010 04:56PM
THANKS, I also think option 2 would be the one to try.



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