tax question - married (two states)

  • Thread starter Robert Anderson
  • Start date

R

Robert Anderson

My wife attends graduate school in California and worked as
well (as a research assistant at the University).

I worked in Oregon.

The question is how should we do our taxes?

1. Married - File separately? So I can file Oregon income
tax and she can separately file California income tax?

2. Married - File jointly?

3. Are there other options?

Anyway, what is the best way to handle this? Better yet,
what is the least complicated solution?

Thanks.
 
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K

Katie

Robert said:
My wife attends graduate school in California and worked as
well (as a research assistant at the University).

I worked in Oregon.

The question is how should we do our taxes?

1. Married - File separately? So I can file Oregon income
tax and she can separately file California income tax?

2. Married - File jointly?

3. Are there other options?

Anyway, what is the best way to handle this? Better yet,
what is the least complicated solution?
In California, you must file jointly if you file a joint
federal return. There is an exception when one spouse is a
full year nonresident of California, and that spouse has no
California source income. Whether you have California
source income depends on your wife's domicile, because the
division of income between spouses is determined by the laws
of each spouse's domicile. California is a community
property state, so if her domicile is in California, you
have California source income to the extent of your
community 1/2 of her California earnings. In that event,
she could not file separately if you file jointly for
federal. If her domicile is Oregon, which is a separate
property state, and you have no other California source
income, she could file MFS in California.

For Oregon purposes, when one spouse is a resident and the
other a nonresident, they generally file separately but may
elect to file a joint return if they filed jointly for
federal.

The answers to your questions depend on facts that you have
not provided, because they depend on the residence status of
you and your wife. You are an Oregon resident if (1) you
are domiciled in Oregon, unless you maintain no place of
abode in Oregon, do maintain a place of abode elsewhere, and
spend no more than 30 days of the taxable year in Oregon; or
(2) you maintain a place of abode in Oregon and spend more
than 200 days of the taxable year in Oregon, unless you can
show that you are there for a temporary or transitory
purpose.

You are a California resident if you are (1) present in the
state for a purpose that is not temporary or transitory
(regardless of domicile), or (2) domiciled in California and
absent from the state for a temporary or transitory purpose.

If your wife is in California solely for the purpose of
obtaining a degree in a particular program, and intends
afterwards to make her home with you in Oregon, she is
probably a nonresident of California and a resident
(domiciliary) of Oregon. In that case she could file a
separate nonresident return in California. Oregon would
allow credit on your joint resident return for the tax paid
to California on her California earnings.

If your home is really in California, and your presence in
Oregon is temporary (for work purposes, with the intention
of returning to California to live with your wife in the
near future), the result would be the opposite -- you may be
a nonresident of Oregon, and you both may be residents of
California.

It's also possible that you and your wife have separate
domiciles. You could be domiciled in Oregon, and if she was
a California domiciliary before your marriage and has not
moved out of the state, she could be domiciled in
California. Or if your original home was in California, and
you are in Oregon only temporarily, you could both be
domiciled in California.

There is not enough information here to give you any advice
about your residence status. And no, there is no simple
answer <G>.

Katie in San Diego

The foregoing is intended for educational purposes only and
does not constitute legal or professional advice.
 
S

stevejdufour

I'm a first year HRB guy working in California. I'm almost
sure that MFJ is the best way. CA would not tax income
earned in another state. MFS would be more simple but you
would lose something on federal tax, most likely. If you
have children one of you could file as Head of Household,
possibily if you lived apart for the last half of the year.
I don't think this is your case. I have never heard of any
other options. Other people know more than me however.
 
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B

Bryan Kellar

Robert Anderson said:
My wife attends graduate school in California and worked as
well (as a research assistant at the University).

I worked in Oregon.

The question is how should we do our taxes?

1. Married - File separately? So I can file Oregon income
tax and she can separately file California income tax?

2. Married - File jointly?

3. Are there other options?

Anyway, what is the best way to handle this? Better yet,
what is the least complicated solution?
Well, the answer is different depending on where you and
your wife are domiciled.

If you are Oregon residents, and she is "temporarily" in
Calif, then you will file a full year Oregon joint return.
You would also file a CA return, but she would get a credit
for any taxes paid there. (Which, if she's a student and
making student income, will be less than the Oregon tax.)

If you are truly an OR resident, and she is truly a CA
resident, then you will have a choice on your Oregon return.
You can file a joint 40N, showing your income in Oregon,
but showing her income as not taxed in Oregon.
Alternatively, in this particular situation only, you would
be able to file a seperate (MFS) Oregon 40 return, showing
only your income and deductions. The choice will depend on
which one is better for you. (This option is ONLY available
if you are a resident and she is not considered a resident,
meaning, no plans to return to Oregon.) On the CA side, I
think you would still need a joint return. Perhaps someone
in CA wil verify that.

The best way to handle it will depend upon where you and she
are really domiciled.

Bryan
 

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