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Multistate return

Level 1

Taxpayer is self employed in Texas.  His wife moved go GA in July 2020 for new job, but Taxpayer stayed in TX until the end of the year, and then moved to GA.

All of his income was from TX, NOT GA.  Her income was all GA.  

How do I get the GA tax return to NOT include his income?  

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6 Replies 6
Level 15

Are they both domiciled in TX?  If so, TX is a community property state.  Are you then sure the wife qualifies for the exception to file MFS, assuming they file MFJ for federal?

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Still an AllStar
Level 1

They both were living in TX.  She got a job in GA, moved on her own in mid 2020.  He stayed in TX until the end of the year, then moved to be with her in GA.  So, all of his income was in TX.  (self employed)

All of her income was in GA. The GA return is showing all of his income as GA income.  Does this make sense?

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Level 15

Are you coding things with state source? Are you using TX or US. Unless there is a reason to file TX, use US for Him and GA for her. 


ex-AllStar
Level 15

@cowboys15 But you haven't answered the question about where their domicile is.  Both of them did move physically by the end of the year but domicile may or may not have changed, depending on a whole host of facts and considerations.

Statutory residence and domicile are two distinct legal concepts.  Statutory residence is what you are thinking of but domicile is what drives how the income of both would have to be reported.

Could you confirm the status of each of the spouses?

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Still an AllStar
Level 1

Domicile would be GA for Her

TX for him

I put US on all of his Self employment income, and his income is still showing up on GA return.

 

 

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Level 15

Assuming you have fully assessed the domicile of both spouses, the wife's income since her relocation to GA was not community income but the wife continued to have TX-source community income from the husband through the end of the year.  This will mean that half of the husband's income during her residency in GA will be reportable on her GA return and taxable in GA - probably not what they are expecting.

You are correct that all of his income is from TX, NOT GA and that her income was all GA.  Nevertheless, that's not the issue.  Community property laws do not alter the sourcing of income but they do determine the division of income for tax purposes and, therefore, how the income would need to be reported and by whom.

If you are not familiar with how community property laws apply in the realm of taxation, you may like to refer to this publication: https://www.irs.gov/publications/p555

In the event you will be preparing MFJ for federal but MFS for GA, you will need to create a separate return just for GA because Lacerte can't handle a different filing status for GA.  Since GA is a piggyback state, that will probably mean that the GA return will need to be filed on paper.

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Still an AllStar
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