Can couples living in different states CA/IL & earn their respective income in those states file joint federal&state return but split the income when filing the 2 states?

Forum|Forum|2 years ago
April 2, 2024
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The system recognizes that I am a resident of CA and my spouse is resident of IL. We filed a joint federal return and when I got to the state, the CA state allowed me to input the income solely generated from CA from our total income and calculated my CA refund based on that amount (which kind of makes sense to me). The IL tax was also calculated based on the income from IL only. I’m wondering if this is a new feature recently added to Turbotax or I’m doing something wrong. This is because all what I have seen from online search is that we might have to do MFJ for federal and MFS for the states.
Thanks for your input.

TurboTax Deluxe Online

maglib

Employee

@hardeymorgan California is a community property state. If one spouse is a resident of California and the other is not, you may be required to report income earned outside of California.

if you file a joint return and either spouse/RDP (Resident Domestic Partner) was a nonresident or a part-year resident in 2023,file Form 540NR, California Nonresident or Part-Year Resident Income Tax Return.

Use the same filing status for California that you used for your federal income tax return, unless you are an RDP. If you are an RDP and file single for federal, you must file married/RDP filing jointly or married/RDP filing separately for California.

A great CA publication: https://www.ftb.ca.gov/forms/2023/2023-1031-publication.pdf

For IL Illinois directs spouses who have different states of residence to file separate Illinois returns even if they file a joint federal return. https://tax.illinois.gov/individuals/filingrequirements/filingstatus.html

Do note this is complex. You do get a partial credit for taxes paid to other jurisdictions. Taxpayers may qualify for a credit for income taxes paid to another state when the same income that is taxed by the other state is also taxed by California.

This is a tricky situation and the allocations may get complex. CA is one of the most difficult tax states.

You are going to want to do the IL return first.

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hardeymorganAuthor

Thank you for your prompt response @maglib. Had to go the tax office for help. The states’ refund/balance due is the same as what I had when I used the TurboTax online. Maybe this is because my spouse and I only have W2s, no properties, no credits or adjustments that could have make the filing more complicated.

Thanks once again.