Got Married in 2023 - Need Help Understanding Best Filing Status When Living in Different States

This is a common situation and I can help clarify things for you. For federal tax purposes, your state of residence doesn't affect your filing status options. As a married couple, you can file either "Married Filing Jointly" or "Married Filing Separately" regardless of living in different states. For FICA (Social Security and Medicare taxes), the cap applies individually to each person regardless of filing status. For 2023, Social Security tax was capped at $160,200 of income, so each of you would pay that tax up to that limit independently. Regarding state taxes, you'll each need to file a resident return for your respective states. California is a community property state while Texas has no state income tax, which adds some complexity to your situation. And yes, if your spouse has foreign financial accounts with an aggregate value exceeding $10,000 at any point during the calendar year, you need to file an FBAR (FinCEN Form 114). This is required regardless of your filing status, though filing jointly can sometimes simplify the process.

After facing a similar multi-state situation last year, I discovered https://taxr.ai which was incredibly helpful for sorting through these complex scenarios. Their system analyzes your specific situation with the different state residencies and FICA caps and shows you the actual tax difference between filing jointly vs separately. I was living in Washington while my husband was in California, and we weren't sure how to handle community property rules across states. The taxr.ai tool helped us understand exactly how our income would be allocated and taxed. It also flagged the FBAR requirement for us since my husband had overseas accounts just like your spouse.

Just wanted to follow up - I tried the taxr.ai tool that was recommended and it was exactly what I needed! We're in a similar situation (I'm in Oregon, husband in Washington) and it walked me through each step of determining our optimal filing status. The analysis showed we'd save about $3,200 by filing jointly versus separately, even with the multi-state situation. It also flagged that we needed to file an FBAR for my husband's foreign accounts and explained the reporting thresholds. The documentation requirements section saved me tons of research time!

For anyone dealing with complicated tax situations like this, I highly recommend using https://claimyr.com to get direct answers from the IRS. I was in a similar multi-state marriage situation last year and had specific questions about FBAR requirements that online research couldn't answer clearly. After trying to call the IRS for weeks and getting nowhere, I used Claimyr and got through to an actual IRS agent in about 20 minutes. They confirmed exactly what I needed to do with our state filing situation and FBAR requirements. You can see a demo of how it works here: https://youtu.be/_kiP6q8DX5c It was seriously the best $25 I spent on taxes all year since the agent's advice saved us from making an expensive filing mistake.

I have to eat my words here. After posting my skeptical comment, I decided to try Claimyr because I've been trying to resolve an issue with my tax transcript for THREE MONTHS with no luck getting through to the IRS. I used the service yesterday and got connected to an IRS agent in about 35 minutes. The agent was able to pull up my records and resolve my transcript issue immediately. I also asked about multi-state filing requirements since my situation is similar to the original poster's, and got clear guidance. For what it's worth, the agent confirmed that for married couples living in different states, you can still file jointly for federal purposes while filing separate state returns, and that FBAR filing is required if foreign accounts exceed $10,000 at any point during the year.

Just to add some practical advice from experience - my wife and I lived in different states for two years (NY and NJ) and we always filed jointly for federal and separate state returns. It was definitely more beneficial for us tax-wise. One thing to watch out for is that some tax software doesn't handle multi-state marriages very well. We had to use a more premium version to properly account for the different state residencies and get all the forms right. Especially with California being a community property state, it gets complicated.

Watch out for the "married filing separately" option if either of you has income-based student loan payments! My husband and I tried filing separately last year because we thought it would save on taxes with our different state situations, but it completely messed up my income-based repayment calculation and actually cost us more in the long run.

For the FBAR question - yes, you absolutely need to file if the aggregate value of all foreign accounts exceeded $10k at any point. This is one area where the IRS does NOT mess around. Penalties for non-filing can be insane even if you owe no tax on those accounts. The good news is filing the FBAR is relatively simple and doesn't usually impact your tax liability. It's just an information form. But don't skip it - the penalties start at $10,000 for non-willful violations.