Married filing Jointly

Most states require you to use the same filing status as on the federal return. I don't know specifically about NY or NJ. The usual way of handling earnings in a state in which you don't resided is to file NJ as a non-resident and pay taxes on NJ income, then claim a credit on your NY tax return for taxes paid to NJ. There may be special agreements between NY and bordering states. If you don't know what they are, you might want to consult a tax professional in your area.

What is the best way to go about this scenario?

We live in NY. I work in NJ. She works in NY. We filed federal jointly(MFS) and we we will get back 3500. We tried to file NY state and it says we owe 2700? do we have to NY state jointly, and do we have to file NJ jointly, even though I am the only one that worked there. Thanks. Close variants of this question recently appeared on misc.taxes and us.taxes. If you check on the websites of the NY department of taxation and finance or the NJ department of taxation, under filing status, you will find that, for NY purposes, you must file with the same status you filed for federal purposes because you are both NY residents and don't meet any of the exceptions. For NJ purposes, and assuming that the two of you do not also meet the residency test for NJ purposes, you will qualify for one of the exceptions to the requirement that you use the same filing status for NJ purposes that you used for federal purposes. Since you had NJ-source income, you should file a separate NJ return, under Married Filing Separately, to report that income. Your wife does not have to file a NJ return (assuming she's not a resident) unless she also had NJ-source income. N.B. even if both of you had NJ-source income, you may each still file separate returns if one or both of you are not NJ residents.