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How to File Taxes When You and Your Spouse Move to New York at Different Times

You and your spouse will probably have to file separate returns, but New York does give you the option of filing a joint return – as long as you let it tax all your money

The following is a slightly modified question from one of our readers:

My wife lived and worked in New York City for all of 2012. I lived and worked in Maryland for one month and then lived and worked in NYC for eleven months. I have already filed in MD as a part-time resident. For New York State, though, I am a bit confused. I have filled out a resident return for my wife and a part-time resident return for myself (including a part-time NYC resident worksheet for myself). Do we file jointly as we did for our federal return or do we each file separately? Does this affect our standard deduction? It seems like the two forms we filled out (IT-201 and IT-203) should be filed separately.

This is precisely of the sort of question that boggles taxpayers across the country. State tax residency is such a popular topic on this blog precisely because it is so complicated.

Every taxpayer is responsible for filing a resident return in the state where they live, unless that state happens to be one of the nine that don’t have an income tax. Continue reading “How to File Taxes When You and Your Spouse Move to New York at Different Times”

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States That Don’t Tax Military Retirement Pay

Military veterans should consider retiring to one of these states if they want to lighten their tax burden

Many people intend to retire in a state where they can get the most bang for their buck, and military veterans are no exception. For them, this often involves finding a state that doesn’t tax military retirement pay, or else offers a generous exemption.

In the lists below, you’ll find a  breakdown of how military retirement pay is treated by the tax codes of the various states. In those states not included, military retirement pay is fully taxable.

States with No Income Tax

At the top of the list are the nine states that have no state income tax at all. By default, military retirement pay is completely exempt from tax. These states are: Continue reading “States That Don’t Tax Military Retirement Pay”

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How to File Taxes When Your Spouse Moved From a Different State

If your 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:

State Income Tax: Living in One State, Working in Another

Filing Taxes in Two Different States – What You Need to Know

Photo via Graham Fletcher on Flickr

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