Married filing Jointly Federal

taxestoday
taxestoday Member Posts: 2 Newcomer
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Hi, I maintain an Illinois residence and my husband maintains an Iowa residence. How should we tackle state income tax returns?

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  • Henry
    Henry FreeTaxUSA Agent Posts: 97
    edited December 10 Answer ✓

    Hi taxestoday, you'll need to refer to the Iowa and Illinois instructions to see how to file in your situation.

    According to page 6 of the Illinois instructions, you should use the same filing status as on your federal return. However, if you file a joint federal return and one spouse is a full-year Illinois resident while the other is a nonresident, you may choose to file “married filing separately.” Do not recalculate any items on your federal return. Instead, you must divide each item of income and deduction shown on your joint federal return between your separate Illinois returns following the Allocation Worksheet on Page 17. If you choose to file a joint Illinois return, you must treat both your spouse and yourself as residents. In that case, you may be allowed a credit for income tax paid to another state to help alleviate your tax burden.

    So it sounds like Illinois gives you the option of 1) filing joint federal and Illinois state returns reporting you and your spouse's combined income OR 2) filing separate federal and Illinois state returns reporting only your income OR 3) filing a joint federal return for you and your spouse and a separate Illinois state return for you.

    Now let's look at the Iowa instructions, which say you should "use the same filing status as your federal return, even if only one spouse had income from Iowa sources." This means that third option from IL of filing a joint federal return and separate state returns is not available if you also need to file an IA return.

    Basically, you would need to determine if you want to file 'married filing jointly' federal and state returns and claim both you and your husband's combined income OR if you want to file 'married filing separately' federal and state returns so you only have to claim your individual income on each of the state returns.

    You'll have to decide which option is more beneficial for you. You can try preparing your tax return both ways so you can compare the results. To do this, you'll set up three accounts in the software with separate usernames and passwords:

    Account #1: Enter your information as married filing jointly. Prepare joint state returns for IA and IL.

    Account #2: Enter your information as married filing separate, and prepare an IL return for you.

    Account #3: Enter your spouse's information as married filing separate, and prepare an IA return for him.

    When you are done, you can look at the calculations in each account and decide if you want to finalize and file the joint returns in account #1 or the 'married filing separate' returns in account #2 and #3.

    I hope this helps you know how to proceed!

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