Question

My wifes' state of residency is in NY, but we are stationed in South Carolina. Shouldn't she be entitled to receive all of the NY state income tax that she paid in 2016?

Forum|Forum|7 years ago
June 6, 2019
1 reply
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The refund shows we are getting back about a third of what she paid to New York; did I enter something wrong or is this normal?

TurboTax Deluxe Online

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DS30

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No not necessarily.

Although you are stationed in SC, if she is a resident of NY, then she will need to file an NY residency state income tax return (regardless of where you are stationed or if all of her income was earned in SC). So as an NY resident, she will be taxed on all income from all sources (including any SC-source income).

If she qualifies under the MSRRA and NY is also your home of record, then you can file this NY resident return jointly. (No SC state income tax return would be required).

If she is covered by MSRRA and did end up with SC withholding on her W-2, she will have to file an SC nonresident state income tax return to get these SC withholdings back.

In order to get the full refund of her SC state income tax withholdings, she will need to file a nonresident SC return but report zero "0" income from SC (even though she did have SC wage income). She must mail in this SC nonresident state income tax return and include her state W-2 information. She will want to include an explanatory statement with her SC nonresident state income tax return stating her situation (that her SC employer withheld SC state income taxes from her wages in error because she is a military spouse and covered under MSRRA).

However, if she has SC earnings and is not covered under MSRRA then she will need to do both an SC nonresident state income tax return and a NY resident state income tax return. She will get a state income tax credit in NY for any income that is taxed in both SC and NY.

In this instance (if she is not covered under MSRRA), you would still be able to file your federal income taxes jointly but you would need to file your state income taxes as married filing separately.

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