05 Sep We’re getting married. How should we file our taxes?
Q. Sally and John are getting married in November 2019. What filing status should they use? John lived and worked in Pennsylvania for the first six-and-a-half months of the year and he only have Pennsylvania income. In mid July he permanently moved to New Jersey and got a job there, having only New Jersey income. Sally has always lived and worked in New Jersey. If they file singly, she won’t be able to contribute to a Roth and would eliminate some credits.
— Getting married
A. Congratulations on the upcoming marriage.
Filing status is determined based on marital status as of Dec. 31, 2019. So, a November 2019 marriage will result in taxpayers being treated as married for the entire 2019 year, even though they were single for the first 10 months of 2019.
As a married taxpayer, you have two choices for your filing status: married joint or married separate.
Generally, your New Jersey filing status is required to be the same as your federal filing status, said Neil Becourtney, a certified public accountant and tax partner with CohnReznick in Holmdel.
“There is an exception where a joint federal income tax return is filed, and for the entire year, one spouse was a New Jersey resident and the other spouse was a nonresident of the state,” he said. “In this situation, the resident spouse can file a separate New Jersey income tax return.”
The nonresident spouse would have to file a New Jersey nonresident income tax return if income was received from New Jersey sources, he said. If this fact pattern is met, each spouse calculates income and exemptions as if he or she had filed federal married separate income tax returns.
But John and Sally do not meet this fact pattern because as John was a New Jersey nonresident for only part of 2019, Becourtney said.
One option is to file joint federal and New Jersey income tax returns, he said.
“This would require John’s wages generated during the first half of the year, when he resided and worked in Pennsylvania, to be taxed by New Jersey,” he said. “A resident credit could be claimed for the Pennsylvania tax incurred.”
The other option would be to file separate federal and state income tax returns.
For state purposes, John would file a part-year resident Form NJ-1040 for the last 5.5 months of the year, mid-July through December, when he resided in New Jersey, Becourtney said. Sally would file a separate New Jersey income tax return for the entire year.
For Pennsylvania purposes, filing status is not “married” to your federal filing status, Becourtney said. Spouses may file separate Pennsylvania tax returns instead of a joint tax return if one spouse is a resident and the other is a nonresident.
“If John and Sally file a joint federal income tax return, they would not need to file a joint Pennsylvania tax return,” he said. “John would file a separate Pennsylvania tax return reporting his income generated during the first 6.5 months of the year, while he resided in Pennsylvania.”
But, Becourtney said, it is impossible to know whether filing jointly or separately would produce a lower total tax liability. Factors include the respective income of the spouses and their respective deductions.
“Their 2019 income tax returns would need to be prepared using the different filing statuses to compare the results,” he said. “The loss of the Roth IRA contribution that does not produce a current tax benefit, because it is nondeductible, but provides tax-free distributions in the future, is another consideration in this analysis.”
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This story was originally published Sept. 5, 2019.
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