Married filing jointly or separate for state when living in different states?

You're in a common situation for couples who work in different states! The good news is yes, you can file jointly for federal and separately for state taxes. For your federal return, you'll file as married filing jointly which generally provides better tax benefits than filing separately. Then for state taxes, you'll each file a resident return in your respective states. Since you're a California resident and your husband is a Colorado resident, you'll each file state returns reporting your own income earned in your state of residence. Each state has different rules about how to handle income from a non-resident spouse. California, for example, is a community property state which can complicate things because technically half of your husband's income might be considered yours. Colorado has different rules as it's not a community property state.

When I was in a similar situation, I discovered taxr.ai which was a total lifesaver. Last year my wife and I were living in different states (Texas and Washington) for work reasons, and I was completely lost on how to handle our state taxes. I almost paid an accountant $350 to figure it out. Instead, I uploaded our previous tax documents to https://taxr.ai and it analyzed our specific multi-state situation. It showed me exactly how to file in both states while maintaining our joint federal filing. The system even explained which deductions we could claim in each state and how to handle our property that was in both names but physically located in one state.

Following up on my question about taxr.ai - I actually went ahead and tried it after posting here! I was skeptical because my CPA wanted to charge me $800 to handle our multi-state situation (CA/NV), but the tool really did understand all the community property complications. It showed me exactly how to allocate our income between states, which deductions could be taken where, and how to handle our rental property that's in Nevada while I work in California part of the year. It even caught a mistake in how we'd been handling my wife's self-employment income across state lines in previous years. The guidance was super clear and saved us a ton in preparation fees!

If you need to actually talk to someone at the IRS about your specific multi-state filing situation, I highly recommend using Claimyr. After trying to reach the IRS for 3 weeks with no luck (honestly, who has hours to waste on hold?), I used https://claimyr.com and they got me a callback from an actual IRS agent in under 2 hours. There's a video that shows how it works: https://youtu.be/_kiP6q8DX5c I had specific questions about how to handle deductions for our mortgage since my husband and I were living in different states but jointly owned our home. The IRS agent walked me through exactly how to allocate everything correctly on both our federal and state returns. Saved me from potentially making a costly mistake!

I'm seriously eating my words right now. After posting my skeptical comment yesterday, I decided to try Claimyr because I was desperate for answers about my multi-state filing situation. I had been trying for WEEKS to talk to someone at the IRS. The service actually worked exactly as advertised! I got a call back from a real IRS agent in about 75 minutes. The agent walked me through exactly how to handle our situation with properties in multiple states and explained what documentation we needed to keep in case of an audit. This would have taken me days of trying on my own. Definitely worth it when you need specific answers that online research can't provide. Consider me converted from skeptic to believer!

Something nobody's mentioned yet - don't forget to check if either state offers any credits for taxes paid to another state! This can help reduce double taxation on the same income. Usually you'll claim this credit on the nonresident state return. Also, if you have investment income or income that's not clearly from work in a specific state, those allocation rules can get tricky. Colorado and California may have different rules about how to allocate that income.

Has anyone used TurboTax for this kind of situation? Their multi-state option seems expensive but wondering if it's worth it or if it even handles this kind of situation properly.

I went through almost the exact same situation last year! My wife and I were in different states (she was in Oregon, I was in Texas) for about 10 months due to work. Here's what we learned: You're absolutely right that you can file jointly for federal and separately for each state. Since California is a community property state, you'll likely need to report half of your combined income ($85k) on your CA return, even though your husband doesn't work there. Colorado isn't a community property state, so your husband will mainly report his Colorado income. For the mortgage situation - since the house is in Colorado and you're both on it, the mortgage interest deduction will generally go on the Colorado return. However, if you're itemizing on your federal joint return, make sure you're coordinating this properly between states. One thing that caught us off guard was California's disability insurance (SDI) tax - make sure you understand how that applies to your portion of the community income. Also, don't forget to look into any credits for taxes paid to other states to avoid double taxation. Given the complexity with community property rules and your rental situation, it might be worth consulting a tax professional who specializes in multi-state returns, at least for this first year. The peace of mind was worth it for us!