MFJ: spouse living as full-year resident in one state, me as part-year resident in another state

Ethan_C

Hi, I am struggling a lot to file this year as this is our first year of being married and trying to file our taxes jointly.
I earned no income while being a part-year resident of NJ, before moving to VA and earned all of my income there for the remainder of the year.

My spouse was a full-year resident of IL as a student and earned a little bit of money in IL, and also earned income in NC for a summer internship.

When filing our taxes, how do we make it so that no state is double taxing us? When we go through the state tax returns, there is no option for Illinois to only tax my spouse's income and taxes my income as well.

How should we proceed?

Thank you for reading. Any help would be appreciated!

GeorgeM

Hello Ethan_C:

Unfortunately, you won’t be able to proceed as you have been, namely, filing as Married Filing Jointly (“MFJ”) on your federal tax return, while at the same time filing MFJ on your IL tax return.

What we recommend given your situation is to go ahead and file MFJ on your federal tax return; however, with regard to your IL tax return, elect to file as Married Filing Separately. IL does allow its residents to file separately on their state tax return while at the same time filing MFJ on their federal return. As the spouse with $0 in IL income, you would not need to file an IL tax return. However, your spouse would file as MFS, and then must allocate the income from your joint federal tax return that is properly characterized as income earned from IL.

To accomplish the above, you will need to create a separate account for the IL tax return. Our software cannot change the filing status used on the federal tax return when preparing the state tax return.

While you did not have questions specific to VA, although it appears you did earn some income in VA, you may confront a similar issue when preparing your VA tax return. Here though, you have the option of filing jointly on your VA tax return; however, you will need to report all of your income as if you were both VA residents. Should you decide against filing a joint VA tax return, then the resident spouse will need to file MFS on their VA tax return.