Married Filing Jointly, working in the same state but living in different states
My spouse and I got married last year and we are planing on filing jointly. In 2023, I lived in Minnesota and my spouse lived in Wisconsin. We both earned all of our income in Minnesota. How do we file state taxes?
Answers
-
Thank you for your question, Sammypaige.
Congratulations on your marriage and your plans on filing jointly. Due to your living situation, you will want to file as Full-Time Residents of both Wisconsin and Minnesota since you and your spouse live in these states. While it would make sense to have a different filing status in either state since neither of you live in the same one, FreeTaxUSA doesn't support filing jointly on the Federal and a different status on the state returns.
You may run into some double taxation issues, however there is a special relationship between Minnesota and Wisconsin. You can file a Credit for Taxes Paid to Another State originating in your Minnesota tax return. This generates a Form M1RCR that takes into account the taxes paid to Wisconsin. Please complete both tax returns before returning to the Minnesota screens to organize this credit so that your entries will be correct from both returns.
-
Thanks for the response!
When filing as Full-Time Residents of both Wisconsin and Minnesota do we include our combined incomes for both state returns? Also, would I file the form M1RCR as Full-Year Residents then? Thank you!
-
Hi sammypaige!
Some quick clarifications:
Situations like these can be really tricky, so typically we recommend signing in to your account and asking a customer support agent for help with your specific situation. However, I am happy to share some general guidelines here.
Each state has somewhat different rules for who can file as a resident/nonresident. This means that Wisconsin and Minnesota have different rules, which makes your situation even more complicated.
Wisconsin does not require a resident to use the same filing status as federal. This means that you can file a return using just your spouses income (with the married filing separately status) so that you don't have to pay taxes on your income when you did not live in Wisconsin.
However, Minnesota does require residents to use the same filing status as federal, so you would need to do a joint Minnesota return. This is where the Credit for Taxes Paid to Another State comes in. This is also another situation where I suggest contacting a support agent in your account so they can help with specifics.
As Cory mentioned above, our software does not support using a different filing status on a state return than federal. But we do have a common workaround we recommend that our customers in your situation use. To use this, you would need to create two accounts.
Account One (I am assuming you already have this created): On this account, you would file as Married Filing Jointly. Enter the information in the software for both you and your spouse. You would only prepare and order a MN state return in addition to your federal return. Your MN state return is where you would have to designate the amount of taxes that your spouse already paid to WI so that you can get the credit for that, which I will explain where to find that shortly. Once this is complete, you can e-file both of these returns.
Account Two: On this account, enter your spouse's information and select Married Filing Separately as the filing status. Only enter your spouse's income and expenses. Once you reach the Wisconsin State Summary screen, make note of the income tax assessed by Wisconsin on your spouse's income. This amount needs to be reported on the Minnesota return in your first account when determining the Credit for Taxes Paid to Another State. Finally, purchase a Wisconsin state return and choose to Mail your Federal and State Return. Continue through the software until you get to a screen titled "View Your Return Status and Print Your Copy." Instructions for mailing the WI state return will be located on this screen. If you are asked to mail in a copy of their federal return with their WI state return, include a copy of your actual Married Filing Jointly return, not the "mock" return created in this account.
Once again, this is a lot of information and so we do recommend contacting a support agent while signed in so that they can view your actual information. You can send a message by clicking on "Support" at the top right-hand side of the screen.
