If you’re spouse moved from a different state, you might be unsure how to file your state taxes.
“In 2013 I was a full-year resident of New York State and got a W-2 in NY. However, my wife was a part-year resident of NY (the other state being Ohio) and got two W-2s, one from NY and one from OH. So for our NY State return are we full-year residents or not?”
You may find yourself in a situation like the example above. If so, the first important thing all married couples should note before they try to deal with a complicated state tax situation is that they can actually file separate state tax returns, even if they file a joint federal return.
Filing Jointly vs. Filing Separately
Most married couples will opt to file their federal taxes together, using the married filing jointly filing status, because it provides the greatest benefit. It’s only advantageous to use the married filing separately status in very limited situations.
Even though it makes sense to file a joint federal return, if your state situation is complicated enough, it may make sense to file separate state returns.
Take the example listed above; the man’s situation is pretty simple- he was a resident of NY for all of 2013. It’s pretty clear that he has to file a NY resident return. This will tax him on all of his income for the entire year, no matter where it was earned.
His wife’s situation is more complex because halfway through the year she moved from OH to NY. This means that she needs to file an OH part-year resident return and then a NY part-year resident return.
Her OH part-year resident return will tax her on all of her income (no matter where it was earned) for that portion of the year that she was a permanent resident of OH. Her NY part-year resident return will tax her on all of her income (no matter where it was earned) for the portion of the year that she was a permanent resident of NY.
Some taxpayers may opt to go ahead and file a joint return even though one spouse was a part-year resident. It’s certainly more convenient, and if you moved early in the year, it probably won’t end up making that much of a difference. Plus it could actually end up saving you money on tax preparation fees.
Phew! That’s a lot of state tax information for one couple.
For more information about the supremely complicated world of state taxes, check out some of our other blog posts:
Photo via Graham Fletcher on FlickrThursday, March 14th, 2013 at 2:16 pm and is filed under Tax Tips.