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any state tax experts here?
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Date: October 18th, 2024 10:13 AM Author: UhOh here's the situation:
my wife worked in an income tax state from january through may. she does not count as a resident. she made about $40k.
i reside and work in a non-income tax state. i made about $450k this year.
she owes taxes on any income she made in the state even if she is not a resident. some was withheld from her checks, but that was based on her income rate and won't be sufficient if they consider our joint income.
i really want to file jointly federally, but that means she has to file jointly on the state return, which drags my income into it and may be considered partly her income under community property laws. but she wasn't a resident, and i wasn't a resident, so wouldn't her tax liability be limited to the income she actually earned in that state? what do i do here? blow off the state return and hope for the best? |
Date: October 18th, 2024 10:16 AM Author: animeboi (.) not a MFTE but if you didn't make any income in that state you would not pay any taxes to it so I don't see the issue in 'dragging your income' onto the return. I had to do multi-state filings this year, and it was two columns 'amount on 1040' and 'amount in state X', so you just claim zero on your stuff. |
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Date: October 18th, 2024 10:20 AM Author: UhOh i guess i'm worried about them even noticing it and getting into a situation of having to prove who lived where when. she's going to file a state return that says we made $500k jointly but we're only paying them on $40k and they're going to want to get their grubby hands on all of it.
we could file separately and they wouldn't even know i exist, but then i'd get raped on the federal side. |
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Date: October 18th, 2024 10:26 AM Author: animeboi (.) This out of state income thing is way more common than you think (even before work from home, think of all the cities near state borders with suburbs on the other side), and I doubt states are trying to steal peoples money this way. (http://www.autoadmit.com/thread.php?thread_id=5613594&forum_id=2Elisa#48211004) |
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Date: October 18th, 2024 10:27 AM Author: UhOh yeah we're in neighboring states, i'm sure it comes up all the time. i guess i'll finally hire a tax person to handle it. i've always done it myself but i don't want to fuck around here. (http://www.autoadmit.com/thread.php?thread_id=5613594&forum_id=2Elisa#48211010) |
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Date: October 18th, 2024 10:26 AM Author: ruinous phenotype https://ttlc.intuit.com/turbotax-support/en-us/help-article/small-business-processes/prepare-joint-federal-return-separate-state/L7I53364c_US_en_US (http://www.autoadmit.com/thread.php?thread_id=5613594&forum_id=2Elisa#48211007) |
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Date: October 18th, 2024 10:29 AM Author: Karlstack's transsexual crush Is it a community property state? If so, do you have a prenuptial or postnuptial agreement separating your income and assets? (http://www.autoadmit.com/thread.php?thread_id=5613594&forum_id=2Elisa#48211016) |
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Date: October 18th, 2024 10:30 AM Author: UhOh it is, we do not. but she wasn't a resident, so isn't her liability limited to what she actually earned in state? (http://www.autoadmit.com/thread.php?thread_id=5613594&forum_id=2Elisa#48211022) |
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Date: October 18th, 2024 10:45 AM Author: Karlstack's transsexual crush Since the income was sourced in a non-community state, that seems to be right. But if you're filing jointly, you will have to file with all of your income. (http://www.autoadmit.com/thread.php?thread_id=5613594&forum_id=2Elisa#48211102) |
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Date: October 18th, 2024 10:53 AM Author: UhOh both states are community. (http://www.autoadmit.com/thread.php?thread_id=5613594&forum_id=2Elisa#48211150) |
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Date: October 18th, 2024 10:57 AM Author: Karlstack's transsexual crush Oh, then you're fully fucked. She owns 50% of your income by law and so even if you filed separate returns she would have to pay taxes on half of your income. (http://www.autoadmit.com/thread.php?thread_id=5613594&forum_id=2Elisa#48211168) |
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Date: October 18th, 2024 10:57 AM Author: UhOh i think this is right if she were a resident of the other state, but when you're not a resident your liability is limited to the income you actually earned in that state. or would they get her for 50% of my income for the 5 months she was there? (http://www.autoadmit.com/thread.php?thread_id=5613594&forum_id=2Elisa#48211174) |
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Date: October 18th, 2024 10:34 AM Author: ,,.,.,,,.,.,.,.,.,.,.,,.,,.,.,.,..,., actual credentialed tax expert here -
are you SURE you can't file federal MFJ and state separately? the answer varies depending on the individual state, and you didn't specify the state, so i can't speak to that based on the OP. note that sometimes tax software will not let you do this but that's a separate issue than whether the law lets you do it, and sometimes a work around can just be preparing two separate returns if you are using software and not a tax pro. |
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Date: October 18th, 2024 10:36 AM Author: UhOh yes, the state requires the same filing type as the federal. (http://www.autoadmit.com/thread.php?thread_id=5613594&forum_id=2Elisa#48211044) |
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Date: October 18th, 2024 10:39 AM Author: ,,.,.,,,.,.,.,.,.,.,.,,.,,.,.,.,..,., bummer but then the fallback here is - you should likely still be able to income-allocate most of your state joint return non-resident income to non-state sourced income. so even if you have to REPORT your 450k, you should be able to escape taxation of it by the state
and then the fallback fallback if THAT doesn't work for some reason would be considering a MFS federal filing but obviously that can suck for various reasons and you'd have to crunch the numbers on whether that'd be helpful in your case |
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Date: October 18th, 2024 10:42 AM Author: UhOh thanks friend. MFS federally would be a yuge cost.
it should easy enough to prove her situation - she has a lease with just her name on it ending in may. that should be the end of any residency issues for both of us. but i'm just worried about getting in some protracted case with them trying to get their hands on my income. i don't know what it would take to satisfy them, so i kind of think fuck it don't even file with them. but they've got in-state w2s so if she doesn't file it'll probably pop up. |
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Date: October 18th, 2024 10:44 AM Author: ,,.,.,,,.,.,.,.,.,.,.,,.,,.,.,.,..,., some states are REALLY aggressive in residency audits but if you have the "receipts" you should be fine, just some more BS hoops to jump through most likely (http://www.autoadmit.com/thread.php?thread_id=5613594&forum_id=2Elisa#48211092) |
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Date: October 18th, 2024 10:52 AM Author: UhOh what do you think about not even filing the state return? she had state taxes withheld from her w2 and it's just 40k so i can't imagine they'd go after it. seems to me there's a chance we fly under the radar and there's a chance she gets audited, the outcome of which isn't going to be much different than if we had filed and they come after me. so why not take the chance? (http://www.autoadmit.com/thread.php?thread_id=5613594&forum_id=2Elisa#48211143) |
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Date: October 18th, 2024 2:32 PM Author: ,,.,.,,,.,.,.,.,.,.,.,,.,,.,.,.,..,., i would generally advise to just get out ahead of it rather than try to slide on by when there is a paper trail of income being reported to the govt. in federal tax world it's computers that handle anything that gets underreported in the first instance - there's like no human involvement, you're essentially getting audited by mail from chatgpt. lots of states have similar systems in place so the chance of them flagging it when there's a paper trail rounds to 100%. to have any success with "flying under the radar" you typically need income that's not even on the radar of the computers in the first place. (http://www.autoadmit.com/thread.php?thread_id=5613594&forum_id=2Elisa#48212222) |
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Date: October 18th, 2024 3:39 PM Author: UhOh what if they don't have our current address and she's never going to work in that state again? she gets audited, we never respond to it, some kind of judgment is entered. then what? is there an interstate compact on this shit?
the truth is i was there a lot, too and if they asked for credit card records or airline records or whatever in order to prove i wasn't there then i'm fucked. |
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Date: October 18th, 2024 3:46 PM Author: ,,.,.,,,.,.,.,.,.,.,.,,.,,.,.,.,..,., they can collect out of state although depending on the circumstances they may have to domesticate the judgment, which might not be worth it for them. one common tool they use is to claw back federal tax refunds for state liabilities. (http://www.autoadmit.com/thread.php?thread_id=5613594&forum_id=2Elisa#48212498) |
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Date: October 18th, 2024 3:48 PM Author: UhOh but that's the thing - if we don't respond, how do they know what our state liabilities are? she's had an appropriate amount of state tax withheld from her checks, so she appears OK. the violation in that case is not filing at all, not not paying a sufficient amount of state tax. it's only when we file a joint state return that things get questionable. (http://www.autoadmit.com/thread.php?thread_id=5613594&forum_id=2Elisa#48212504) |
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Date: October 18th, 2024 3:54 PM Author: ,,.,.,,,.,.,.,.,.,.,.,,.,,.,.,.,..,., states can get your federal tax return info from the feds fyi (http://www.autoadmit.com/thread.php?thread_id=5613594&forum_id=2Elisa#48212526) |
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Date: October 18th, 2024 3:57 PM Author: UhOh ah fuck ok. thanks for all the advice. (http://www.autoadmit.com/thread.php?thread_id=5613594&forum_id=2Elisa#48212544) |
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Date: October 18th, 2024 3:58 PM Author: ,,.,.,,,.,.,.,.,.,.,.,,.,,.,.,.,..,., not a problem, literally this is what i do for a living :) (http://www.autoadmit.com/thread.php?thread_id=5613594&forum_id=2Elisa#48212551) |
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Date: October 18th, 2024 5:00 PM Author: UhOh plz see my updated thoughts below (http://www.autoadmit.com/thread.php?thread_id=5613594&forum_id=2Elisa#48212766) |
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Date: October 18th, 2024 3:33 PM Author: UhOh ok i did some research.
if i file fed taxes jointly, then she has to file a joint state return and they're going to see my income. i wouldn't pay them on the argument that only her income derives from the state, but if i get audited i'm going to lose that argument due to my "domicile" and will owe them around $40k + penalties and interest. this seems like the highest risk option.
if we file fed separately, she can file an individual state return and the form only requires her to put my name and ss number on it. presumably they could get my 1040 income from the IRS with my name and ss, but if they wanted it at all why wouldn't they just ask for it on her form? so it seems to me that they take the form at face value and they wouldn't even look at me. they only look if she checks the "filed fed jointly" box. it would cost me about $6k more to file fed separately and that should keep me off their radar. the seems like the lowest risk option.
but the risk is that i pay more to file separately and they end up finding out anyway, a loss of $46k + penalties and interest. maybe they auto-audit every married individual filer whose spouse doesn't file? but what is the grounds for investigation? she filed a single return which showed her in state income and she paid her taxes. does the mere fact that she is married justify a residency audit of her spouse, a person who does not exist on any document in the state?
or i could file fed jointly and not file the state at all and hope for the best. worst case scenario is $40k + penalties and interest. mid risk option.
or file fed separate and don't file anything with the state. this option most minimizes my exposure. they might audit her, but why - she's a low income earner who already paid taxes via w2 withholdings. |
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Date: October 18th, 2024 5:48 PM Author: ,,.,.,,,.,.,.,.,.,.,.,,.,,.,.,.,..,., elaborate on domicile analysis (http://www.autoadmit.com/thread.php?thread_id=5613594&forum_id=2Elisa#48212913) |
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Date: October 18th, 2024 6:04 PM Author: UhOh you can be considered a resident either by being there for more than 6 months or by ever being "domiciled" there.
the idea is you can only have one domicile at a time and that's the place you come back to from work trips and vacations. it sounds complicated but i think the burden would be on me to prove her address wasn't my domicile and i was there way too much to win that argument.
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Date: October 18th, 2024 6:08 PM Author: ,,,,.....,,,,...,........,,,.....,,...,... That isn't a domicile analysis btw
I'd go hard on it and refuse to file there altogether. But hey that's me |
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Date: October 18th, 2024 6:13 PM Author: UhOh yeah nm that was wrong, you have to be "domiciled" there for a year to be a resident.
i'm leaning toward not filing with the state. she only made $40k over six months from an in-state employer who already withheld state taxes from her checks. that's gotta be pretty low risk for an audit. they're busy with 1099 guys who haven't paid anything.
but i don't know if i should do fed separately to really avoid the exposure. if we file separately and she gets investigated by the state, they're going to see her federal income is $40k, the same as their records will show and the same amount that she's already paid taxes on. that should end it. but if we file jointly and she gets investigated, they're going to see $500k and start asking questions. |