Married filing joint - State tax

[dmck 80]

pay the ~$150'ish for a CPA to do your taxes. You are exempt from income earned abroad before you immigrated.

[GabbyBird 53]

I have to research a bit more... I think I will stick with MFJ for Federal but I want to see if I can get the state tax down to 0. There must be a way to get my income off the State tax calculation

I'm no CPA, but have been an NJ resident all my life. NJ is notorious for being a greedy tax state and I can't think of a single return where I have not owed at least $1000 to the state even when I may get back several thousand from my federal return. Heck, they even want you to declare ANY purchases out of state you didn't pay sales tax on.

I agree with other posters. You are an exceptional case and should probably just hire a tax person this year rather than trying it yourself. Its not too expensive.

Edited March 28, 2016 by GabbyBird

[Pennycat 880]

NJ Income Tax - Filing Status

Your filing status and taxable income determine the amount of tax you will pay. In general, New Jersey follows the Federal guidelines for determining your filing status. If you file a Federal income tax return, in most cases you must use the same filing status on your New Jersey return, unless you are a partner in a civil union. If you are not required to file a Federal return, use the same filing status on your New Jersey return that you would have used if you had filed a Federal return.

Partners in a civil union recognized under New Jersey law must file their New Jersey income tax returns using the same filing statuses accorded spouses under New Jersey Gross Income Tax Law. Partners in a civil union may not use the filing status single even though they do so for Federal purposes.

I think this means i have to file MFJ as thats what my federal is going to be. Whats confusing me is do I owe state tax even I didnt work here at all during the tax year...

I think the issue is that because you've opted to be treated as a resident for tax purposes (thus enabling you to file MFJ which is very much beneficial at the federal level), you are being treated as a resident for tax purposes which may not be beneficial at the state level. While it's true that you didn't work in NJ during the tax year, you've opted to be treated as if you did (maybe??? I'm still getting my head around this myself).

I really can't speak for state taxes (particularly not a state that I don't live in) but I think that this is the logic. You can still choose to be treated as a non-resident but then she'd have to file federal separately and that probably is a net loss for you.

[Henley1989 10]

I'm no CPA, but have been an NJ resident all my life. NJ is notorious for being a greedy tax state and I can't think of a single return where I have not owed at least $1000 to the state even when I may get back several thousand from my federal return. Heck, they even want you to declare ANY purchases out of state you didn't pay sales tax on.

I agree with other posters. You are an exceptional case and should probably just hire a tax person this year rather than trying it yourself. Its not too expensive.

Ok thanks. Im going to start calling around..

I think the issue is that because you've opted to be treated as a resident for tax purposes (thus enabling you to file MFJ which is very much beneficial at the federal level), you are being treated as a resident for tax purposes which may not be beneficial at the state level. While it's true that you didn't work in NJ during the tax year, you've opted to be treated as if you did (maybe??? I'm still getting my head around this myself).

I really can't speak for state taxes (particularly not a state that I don't live in) but I think that this is the logic. You can still choose to be treated as a non-resident but then she'd have to file federal separately and that probably is a net loss for you.

Exactly. Thats what I think is happening. MFJ is beneficial for us (and Im treated as a resident) - So its then treating me as a resident for State and asking me for 900 bucks haha.

Still investigating the best way forward.

[Pennycat 880]

Ok thanks. Im going to start calling around..

Exactly. Thats what I think is happening. MFJ is beneficial for us (and Im treated as a resident) - So its then treating me as a resident for State and asking me for 900 bucks haha.

Still investigating the best way forward.

Right, pretty much. This is NJ basically saying that you can't have your cake and eat it too, unfortunately. You do not *have* to pay taxes on your income this year because you did not live in NJ this year. BUT, if you elect to be treated as if you *were* a resident, then you have to pay. You're basically asking to be treated as a resident and then turning around and asking why you have to pay if you weren't a resident.

If it is still beneficial for you at the federal level (which it sounds like it is-- she was paying with the single withholding and now is filing married and getting a double standard deduction because of it-- which technically one of the standard deductions is for you and YOUR income but because your income is exempted this year-- it's basically all for her), I'd just go with what you've got. I am pretty sure that you can't file as two different statuses (unless it was during the time when you were in a civil union recognized by NJ that was not recognized by the federal government, from the sound of it).

The other thing it *could* be is what's sort of going on for us with federal-- which is that you're not paying taxes on the income but may have been pushed to a higher bracket so she's paying a higher percentage on her own income. This is how it was explained to me the other day:

Foreign income exclusion doesn't erase the foreign entirely. The tax is calculated:

Tax on all of it $xxx

Tax on the foreign income alone $yyy

$xxx minus $yyy = your final tax (Line 44)

That is the rule if you have foreign income. They take off the tax it would generate. They don't completely ignore the income. Don't have time tonight to explain how that makes a difference but can be related to higher bracket for the $xxx and a lower tax bracket for the $yyy.

[Nich-Nick 3,354]

The problem is him using TurboTax and not reading NJ tax law to know what he is looking at.

NJ Does not ask for any numbers off the federal return. It is a separate issue. Turbo Tax is assuming they are a regular NJ couple with joint NJ income and doing the state return as such.it will be that way next year.

NJ says in the case of one spouse resident all year and the other only resident part year, each will file their own returns. They will say they are married on their own return and give the spouse SSN.

For her--

a NJ resident return but only her income. Gets a refund.

For him--

a NJ non resident return for the dates in UK. It has a place to list dates resident IN NJ- Nov 4 to Dec 31. It has two columns for income.

A. Money earned while nonresident $xxxxx.xx

B. Money earned while resident $0 00

Tax due $0 because they only tax NJ income

AND for him again--

a NJ resident return for the dates in NJ. It has a place to list dates resident IN NJ- Nov 4 to Dec 31.

NJ income earned in 2015- $0.00

Tax due- $0.00

They require him to file theses zero returns because he exceeded the $10k threshold for reporting money earned everywhere. He reports but is not taxed.

I can't tell if TurboTax can figure this out because I don't have a NJ state TurboTax. I told him to try an edit in his personal info asking residency in NJ. Because it is an exception due to residency, he may have to fill out NJ on the state website. .

[MariaR323 199]

He has to make sure he's using the correct filing status primarily.

In this case both would file their personal state tax returns as Married Filing Separately - that's the kicker here. This filing status for the US citizen wife might not produce the result the OP was originally looking for - a higher refund. The MFS status limits the credits/deductions available and reduces the standard deduction, which in turn usually produces the highest tax liability.

[Nich-Nick 3,354]

He has to make sure he's using the correct filing status primarily.

In this case both would file their personal state tax returns as Married Filing Separately - that's the kicker here. This filing status for the US citizen wife might not produce the result the OP was originally looking for - a higher refund. The MFS status limits the credits/deductions available and reduces the standard deduction, which in turn usually produces the highest tax liability.

It works. They have no deductions really. Very basic return. I have their numbers. Fed is Married Filing Joint with Foreign Income exclusion. State allows different filing status if they were not both residents the full year. What they elect to do federally does not follow to NJ return.

"the spouse/civil union partner who had income from New Jersey sources may file a separate New Jersey return even if a joint Federal return was filed. "

Edited March 28, 2016 by Nich-Nick

[MariaR323 199]

Sounds good then. The only thing I stress is that she doesn't file the state tax return as Single, she needs to file MFS.

The part about not having to use the same filing status and may file a separate return is just to indicate they can "break off" from MFJ at the Federal level, but it doesn't mean they can use the Single filing status. They are still married hence, they can only use a married filing status (or HOH if applicable, but not the case here).

[Nich-Nick 3,354]

Sounds good then. The only thing I stress is that she doesn't file the state tax return as Single, she needs to file MFS.

The part about not having to use the same filing status and may file a separate return is just to indicate they can "break off" from MFJ at the Federal level, but it doesn't mean they can use the Single filing status. They are still married hence, they can only use a married filing status (or HOH if applicable, but not the case here).

The filing status to choose:

Married/CU Partner, filing separate return.

Enter Spouse's/CU Partner's SS No. in the boxes above.