two state incomes - file jointly or separately?


S

sid

My wife got a different job last september and moved (for
the time being) to state X, I being in state Y. She has two
W-2s one from each of X and Y. I have a single W-2 from
state Y. She also has a 1099 MISC from state Y. We have
joint brokerage account with dividend and cap gain
distributions to report. We are filing jointly for federal
(using taxcut software). But I am clueless for states. Does
she file jointly or separately to state X? (also not sure
whether to file as resident, part-year or non-resident - The
State law says different things in different places). Does
she have to report all her income (and all of mine) in both
states. Do we file as part year residents in state Y
eventhough I was a full year resident. Very confusing. I
figure filing separately will be cleaner for both X and Y.
But I also feel we may be penalized (in amount of tax we
pay) for this.
 
Last edited by a moderator:
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P

Phil Marti

sid said:
My wife got a different job last september and moved (for
the time being) to state X, I being in state Y. She has two
W-2s one from each of X and Y. I have a single W-2 from
state Y. She also has a 1099 MISC from state Y. We have
joint brokerage account with dividend and cap gain
distributions to report. We are filing jointly for federal
(using taxcut software). But I am clueless for states.
I don't have a copy of State X's and State Y's instructions
handy, but that's where you need to look. I'd go directly
to the source rather than relying on TaxCut.
 
Last edited by a moderator:
B

Benjamin Yazersky CPA

sid said:
My wife got a different job last september and moved (for
the time being) to state X, I being in state Y. She has two
W-2s one from each of X and Y. I have a single W-2 from
state Y. She also has a 1099 MISC from state Y. We have
joint brokerage account with dividend and cap gain
distributions to report. We are filing jointly for federal
(using taxcut software). But I am clueless for states. Does
she file jointly or separately to state X? (also not sure
whether to file as resident, part-year or non-resident - The
State law says different things in different places). Does
she have to report all her income (and all of mine) in both
states. Do we file as part year residents in state Y
eventhough I was a full year resident. Very confusing. I
figure filing separately will be cleaner for both X and Y.
But I also feel we may be penalized (in amount of tax we
pay) for this.
The rules are different in each state.
You have to check the rules for the states that you have to
file in.
 
Last edited by a moderator:
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K

Katie

sid said:
My wife got a different job last september and moved (for
the time being) to state X, I being in state Y. She has two
W-2s one from each of X and Y. I have a single W-2 from
state Y. She also has a 1099 MISC from state Y. We have
joint brokerage account with dividend and cap gain
distributions to report. We are filing jointly for federal
(using taxcut software). But I am clueless for states. Does
she file jointly or separately to state X? (also not sure
whether to file as resident, part-year or non-resident - The
State law says different things in different places). Does
she have to report all her income (and all of mine) in both
states. Do we file as part year residents in state Y
eventhough I was a full year resident. Very confusing. I
figure filing separately will be cleaner for both X and Y.
But I also feel we may be penalized (in amount of tax we
pay) for this.
Depending on the state involved and all of the facts and
circumstances, your wife may have remained a resident of
State Y for income tax purposes. And depending on the laws
of State X and the facts and circumstances, she may also be
a resident of State X.

If she is a dual resident (domiciled in State Y but also
meeting State X's statutory definition of a resident), then
all of her income from intangibles (interest, dividends,
etc) will be taxable by both states, and, again depending on
which specific states are involved, there may be no credit
relief available.

There are further complications if either or both states are
community property states.

Your situation is more perilous than you realize. You
should probably consult a tax professional who is familiar
with the laws of both states.

Katie in San Diego
 
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