residency complications

[Janitor Bob]

maried couple....no kids...1 mortgage and each have 1 W-2...should be simple enough right? Wellll........

They kept the previous home in Springfield, OH, but on 12/31/09, HE moved to WV to be closer to work and SHE moved in with her mom in Sidney, OH because she was ill...then on 07/01/10, she moved to WV to live with him.

HE lived in WV, but worked in PA all of 2010 and has only PA wages on his W-2

SHE lived 1/2 year in OH and 1/2 year in WV, and has only OH wages (did not work after moving to WV)

It is better for them to file as MFJ

Holy crap!

[Margaret CPA in OH]

JB, that's even worse than mine! I think you have to try all combinations but check MFJ vs MFS first as OH residents. Then check WV to see if it allows filing status different from federal.

Why can't these people just stay together in one place? I want my client to move to VA to be with his wife and stop confusing me!

[kcjenkins]

So she is a full-yr OH resident, [the visit with her mother was just that, an extended visit, not relevant for tax purposes] and he is a full-yr WV resident with PA wages. Do PA and WV have any reciprocal agreements about taxes? Otherwise, he files PA non-resident, WV resident taking credit as allowed for PA taxes paid. She files OH resident, and they file the Fed whichever way works best for them combined, either MFJ or MFS. And you bill should be HEFTY, JB, don't short yourself, you did not create the complexity, you are just dealing with it. Your time is valuable to you, and your service is valuable to them, and besides, you will probably lose them next year anyway, just because they are so far away, and apparently they procrastinate, if they just got this to you recently, so they will probably look for someone 'handy' there next year. So get paid well for this year, given the number of returns you are going to be filing.

[Pacun]

So she is a full-yr OH resident, [the visit with her mother was just that, an extended visit, not relevant for tax purposes]

Correct, visit to mother doesn't change the fact that she lived in OH because it was not the big Sidney.

[Margaret CPA in OH]

KC, Ohio must be filed the same as federal which is why I suggested starting there. You do make good points about reciprocity, though. I know it works well in the OH, KY, IN corner. I agree that she was full year OH resident whether working in Springfield or visiting mom in Sydney but OH follows federal filing. Which makes some painful machinations at times because it is not rare for couples to owe significant federal tax but get significant Ohio refunds thus making the split financially worthwhile but expensive.

[Janitor Bob]

KC, Ohio must be filed the same as federal which is why I suggested starting there. You do make good points about reciprocity, though. I know it works well in the OH, KY, IN corner. I agree that she was full year OH resident whether working in Springfield or visiting mom in Sydney but OH follows federal filing. Which makes some painful machinations at times because it is not rare for couples to owe significant federal tax but get significant Ohio refunds thus making the split financially worthwhile but expensive.

It is a lot better for them to File MFJ.....So I am thinking about using their WV address on the 1040. On the Ohio return, he will be non-resident, she will be part-year resident. On PA return, they will both be non-residents. I think I can get away without doing a WV return, since neithe had WV income.

[Margaret CPA in OH]

Way to go, JB! It does seem odd to not file a return for the state where they actually live, though, doesn't it? Might want to check WV requirements especially if husband established residency for the year with driver's license, voting, and whatnot.

[kcjenkins]

Remember, the IRS notifies whichever state is shown on the Fed of the filing of the return. So then WV will want a return. They do not care that the income was earned elsewhere, if you are a resident you owe them a return on all your income, tho they will give you credit for taxes paid to other states.

Had this problem hit me in the face with a client who moved to AR a few years ago, having moved from MO but not having filed at all for three years. We filed all the back years, and of course, we filed MO state returns since he was a MO resident working in MO in those years. But then a year later, he gets a notice from AR wanting taxes paid on his income for those three years, simply because the IRS had sent them the data because he was now living in AR. IT took us two YEARS to get AR to back off and accept that he was not living in AR those years. He was working in ST Louis, for goodness sake, and now, living in Jonesboro, AR, they suggested that he might have been COMMUTING !!!!!!

Why sure, it's only 4½ to 5 hours to drive to St Louis, MO from here! ONE WAY! Who would object to driving that twice a day, 5 days a week?

Suggested routes

1. 4 hours 25 mins

US-67 N

231 mi

2. 4 hours 30 mins

I-55 N

264 mi

3. 4 hours 48 mins

US-67 N and I-55 N

254 mi

[kcjenkins]

My point is, Bob, don't leave WV out of the mix, just because they don't know about the income NOW. Once you file it, they will. And it's not worth a small tax bill saved now, to be followed by trouble later. And you to blame for the bad advice. You could end up paying those taxes, plus interest and penalty. Do the WV return too.

[Margaret CPA in OH]

Nicely demonstrated from your personal experience, KC. It just didn't seem right to not file WV and you explained why! Now how do I determine in my situation a 'home' state? He is full year resident of Ohio, she of Virginia. Arrrgghhh! Although federal is better by a lot, it is getting too complicated when OH requires the same status but she isn't a resident. Tomorrow, tomorrow, oh wait, that's in only 2 minutes. Yikes!

[Janitor Bob]

Nicely demonstrated from your personal experience, KC. It just didn't seem right to not file WV and you explained why! Now how do I determine in my situation a 'home' state? He is full year resident of Ohio, she of Virginia. Arrrgghhh! Although federal is better by a lot, it is getting too complicated when OH requires the same status but she isn't a resident. Tomorrow, tomorrow, oh wait, that's in only 2 minutes. Yikes!

Good points...I'll add a WV return to the mix.

three years ago this same client had W-2s from 5 different states (OH, PA, KY, IN, WV)....all but OH were non-resident....So at least this year, his wages are all from one state.

[rfassett]

And dare I say it, don't forget to check into any LOCAL income tax filing requirements for the different workplaces and/or residences. Yes, these "simplest" returns can sometimes turn into the biggest messes. Charge accordingly. And you might save yourself some grief by calling the client now and apprise them of the fees you are going to be charging them.

[BulldogTom]

This confirms my new policy not to take on any OH tax returns ever again. I will send them all to you JB.

Tom

Lodi, CA

[Margaret CPA in OH]

I want JB to do all mine, too. Oh, that means virtually all my clients. Hmmm, how much would you pay for my practice, JB? I want to retire!