Question

Can I avoid paying Maine income tax, where my wife works?

Forum|Forum|3 years ago
February 10, 2023
1 reply
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My wife and I both live and I work in NH, where there is no state income tax. She works in Maine, where she pays income tax. Aside from filing separate, is there any other way to avoid having my NH income taken into account when paying taxes?

TurboTax Online

HopeS

Yes, there is a way to avoid your income getting taxed in Maine since you do not work there. Only the income earned in Maine by your wife should be sourced to Maine's return.

The general rule is anyone who is a resident of Maine for any part of the tax year, and has taxable Maine-source income, must file a Maine return. Therefore, you would file a nonresident return for Maine and apportion only the income earned by your wife to Maine. See the steps below:

Once you've determined that you need to file a nonresident state return, the first thing you want to do is make sure you've filled out the Personal Info section correctly:

With your return open, select My Info in the left-hand menu.
Then, on the Personal info summary screen, scroll down to Other State Income, and select Edit.
Did you make money in any other states? the question, answer Yes, and make sure your nonresident state(s) are selected from the drop-down.
Select Continue to return to your Personal info summary.

Also, you can refer to the link below for additional guidance.

Nonresident return

@jbaro94

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Hal_Al

Employee

I'm not specifically familiar with ME tax rules and TT software. But, the way it works in all states is that you allocate your income as ME or not ME income in the state interview.

One (usually) helpful technique is to show NH on lines 15-20 at the W-2 screen in the federal section of TT. Since NH is a no income tax state, your actual W-2 is probably blank in boxes 15-20. When you enter your W-2, in TT, enter NH in box 15 and the box 1 amount in box 16.