Help filing State taxes. Married but lived separately in two different states all year.?

Question

I started filing our taxes online on turbotax and it looks like I have run into a problem w/the states. My husband and I married in Nov, I am a resident of CA and earned all my income in CA, he is a resident of NJ but has income all from NY state. Neither of us lived or worked in the others state at all. I am filing our federal return as Joint in order to get us the most benefit/deductions even though we never lived together in 06, but when I went to file our state returns it appears as though it's a problem b/c it is saying I owe CA $340 when I dont believe I should owe based on my income/tax situation last year. Is it taking our joint income from the Fed return and assuming I didnt pay CA enough state taxes due to my hsuband making so much more? Anyone know how to resolve this when a married couple resided in 2 different states all year? Do we have to file our state returns as MFJ if our Fed return is, or can it be done separately?

We would've just used an accountant if we were in the US still, but right now we are living overseas for my husbands job for most of this year, so it seemed easiest for us to just file our stuff online here since we dont know how to go about having somebody do this for us back in the US since we're both overseas. It seemed easy enough for us to file the federal online, it's just these state returns that are presenting a problem since we lived/worked in diff states. I dont know how to go about finding an accountant to do our taxes while we live overseas, though.

Answer 1

You'll have to dig a bit to find out what the states will require you to do. It's been over 20 years since I had an income split in CA; my wife had CA income but I was military domiciled in TX so my mil pay wasn't subject to CA tax. CA did allow a joint return but we had to run through some complex calculations to get my income out of the picture. If memory serves correctly, we had to file a non-resident CA return, and CA taxed her income at the higher rate that would have been in effect if my income was taxed there as well. If you're using software to prepare your returns, you may have to get the CA forms and do it manually if the software insists on putting all of your income in on the CA return.

NY is pretty easy, only his non-resident income is claimed there. You can file jointly as well but again you may have to go through some calculations to get your income out of the picture.

Ditto for NJ. He'll take a credit for the tax paid to NY on his NJ return.

Every state has their own rules. Some allow you to file separate returns even though your Federal is joint, while others require the same filing status as your Federal return. At least one state (VA) requires separate returns if only one spouse has income from that state even though the Federal return is joint.

I wish I could give you a cut-and-dried answer but you may have to do some research with each state to find out the most advantageous way to file and you may have to run the calculations several ways to find out the best way to file the state returns.

Answer 2

Unless you have a really and I mean REALLY simple return I would NOT use Turbo Tax, it sucks for anything more then a few W-2 forms. Seek the help of a good Tax Preparer.