MFJ or MFS

[Mani]

My primary residence is in Texas but due to my nature of
work I lived almost 6 months in NJ. My wife work in CA.
Since we live apart she travel monthly once to NJ and stay
in my temporary rented home. Will these travel expenses come
under deductions/exemptions?

Which filing status is good for me to either MFJ or MFS as
she earns little lower than me.

Thanks

Mani

 

[Helen P. OPlanick EA]

My primary residence is in Texas but due to my nature of

work I lived almost 6 months in NJ. My wife work in CA.
Since we live apart she travel monthly once to NJ and stay
in my temporary rented home. Will these travel expenses come
under deductions/exemptions?

None.

Helen, EA in PA
Director, NAEA; Immediate Past President, PSEA; Tax Expert, AOL
Enrolled Agents - THE Tax Professionals

 

[D. Stussy]

My primary residence is in Texas but due to my nature of
work I lived almost 6 months in NJ. My wife work in CA.
Since we live apart she travel monthly once to NJ and stay
in my temporary rented home. Will these travel expenses come
under deductions/exemptions?

No. However, if she is in the situation where she is
TEMPORARILY employed in CA, and thus can claim her
duplication of expenses while in CA, she can deduct the
LESSER of the expense she would incur in CA or the travel.

Which filing status is good for me to either MFJ or MFS as
she earns little lower than me.

MFS will probably be mandated in CA and NJ as only one
spouse is actually there and neither is necessarily a
permanent resident. Federally and for Texas, it will be
your choice.

However, watch for changes in "tax home."

 

[Arthur L. Rubin]

Mani wrote:

MFS will probably be mandated in CA and NJ as only one
spouse is actually there and neither is necessarily a
permanent resident.

Wrong as to CA. MFS is allowed for CA even if Federally
filing MFJ, if the other spouse has no CA income.

 

[Katie]

Mani wrote:

No. However, if she is in the situation where she is
TEMPORARILY employed in CA, and thus can claim her
duplication of expenses while in CA, she can deduct the
LESSER of the expense she would incur in CA or the travel.

MFS will probably be mandated in CA and NJ as only one
spouse is actually there and neither is necessarily a
permanent resident. Federally and for Texas, it will be
your choice.

However, watch for changes in "tax home."

Correction for California: if they file a joint federal
return, they MUST file jointly for California, unless (a) at
least one spouse is active duty military, or (b) one spouse
is a full- or part-year resident and the other is a
full-year nonresident and has no California source income.

Since this couple's domicile appears to be in Texas, which
is a community property state, half of the wife's California
earnings belong to the husband, so he does have California
source income. As a result, they will not meet the
exception above.

If the wife's California employment is temporary, she
probably is not a California resident. However, if she is
employed in an open-ended, common-law employment situation,
she is a resident from the date she entered the state to
take up that employment. In either case, the couple should
file a joint return on Form 540NR unless they file separate
federal returns.

Katie in San Diego
The foregoing is intended for educational purposes only and
does not constitute legal or professional advice.

 

[MTW]

Wrong as to CA. MFS is allowed for CA even if Federally
filing MFJ, if the other spouse has no CA income.

Since CA is a community property state, it would be a neat
trick for the other spouse to have NO income that is sourced
to CA. This would probably be the case only if NEITHER
spouse had any income, in which case the question of tax
filings is kind of "moot." <grin>

Second thought: Maybe this situation would apply as a
special rule to military couples???

MTW

 

[Arthur L. Rubin]

Arthur L. Rubin wrote:

Since CA is a community property state, it would be a neat
trick for the other spouse to have NO income that is sourced
to CA.

It's the way the law is written. I suppose it's possible
for the CA spouse to have separate investment income only.
But perhaps CA allows the taxpayers to disregard community
property law for the purpose of this election, which
would make it more common. I'm working from the law
and publications, not the regulations.

Second thought: Maybe this situation would apply as a
special rule to military couples???

There's a related exception to the MFJ/MFS for military
couples, but it's not the one I was referring to.

 

[Arthur L. Rubin]

Arthur L. Rubin wrote:

Since CA is a community property state, it would be a neat
trick for the other spouse to have NO income that is sourced
to CA.

I should have read the other messages first. Katie was
more specific as to California law. In particular, if
the non-resident spouse does not reside in a community
property state, then the wage income of the CA spouse
is not sourced to the non-CA spouse for CA tax purposes.

Second thought: Maybe this situation would apply as a
special rule to military couples???

Katie mentioned this as a separate exception, as well.

 

[D. Stussy]

Correction for California: if they file a joint federal
return, they MUST file jointly for California, unless (a) at
least one spouse is active duty military, or (b) one spouse
is a full- or part-year resident and the other is a
full-year nonresident and has no California source income.

Since this couple's domicile appears to be in Texas, which
is a community property state, half of the wife's California
earnings belong to the husband, so he does have California
source income. As a result, they will not meet the
exception above.

.....But as both spouses are absent from their state of
residence and are NOT together, is there really an
intermingling of finances that leads to a "continued"
community - so as to impose the sourcing you describe above?
I see the clear possibility of the disregarded community
under IRC 66.

 

[MTW]

I should have read the other messages first. Katie was
more specific as to California law. In particular, if
the non-resident spouse does not reside in a community
property state, then the wage income of the CA spouse
is not sourced to the non-CA spouse for CA tax purposes.

I don't believe that quite was what she said. Hopefully she
will comment further.

Meanwhile, here is an excerpt from FTB Pub 1051A:

-----

California requires you to use the same filing status on
your California return as you used on your federal return.
There are two exceptions to this requirement:

- One spouse was an active duty military member.

- One spouse was a nonresident for the entire year and had
no income from California sources during the tax year.
For more information get FTB Publication 1031, Guidelines
for Determining Resident Status.

Note: The second exception above does not apply if the
spouse with California source income is domiciled in a
community property state, unless the income is separate
income.

 

[Katie]

Slight correction, Art: if the nonresident spouse is
DOMICILED in a separate property state, then his or her
earnings are not community income. The division of income
between spouses is determined by the laws of their state of
domicile, not residence. Residence for tax purposes is not
the same thing as domicile.

In the OP's situation it appeared that both spouses were
domiciled in Texas. Even if the spouse working in
California was a California resident (because she was
employed in a position that could last permanently or
indefinitely), she would still be domiciled in Texas. Again,
assuming the spouses are not estranged and she has not moved
to California with the intent of making a permanent home
there.

Katie in San Diego
The foregoing is intended for educational purposes only and
does not constitute legal or professional advice.

 

[Arthur L. Rubin]

California requires you to use the same filing status on
your California return as you used on your federal return.
There are two exceptions to this requirement:

- One spouse was an active duty military member.

- One spouse was a nonresident for the entire year and had
no income from California sources during the tax year.
For more information get FTB Publication 1031, Guidelines
for Determining Resident Status.

Note: The second exception above does not apply if the
spouse with California source income is domiciled in a
community property state, unless the income is separate
income.

I believe you're correct. Sorry about that.