My wife and kids live in KY. I live and work in Alaska. We filed our federal taxes with no problem. I have heard that for state (KY) purposes, I can 'back out' my income. Only problem is: I can't find the worksheet to do this with. What form do I use?
Also, we have two children that live in KY. Does she claim them as dependents because they live with her? Or do I because I make the larger share of income?
Tax and Accounting Software ForumsWeb and RSS access to your favorite newsgroup - misc.taxes.moderated - 27076 messages and counting!##-----------------------------------------------##.
As there are no community property concerns, the simplest way is to file MFS (married filing separately). (Not necessarily the best bottom-line result, however). If your absence from the KY household is not considered temporary, I believe only your wife can claim the kids as Qualifying Children since only she lived with them more than half the year.
Some states require you use the same filing status as you do for your federal return, so if MFS is not an option, then:
I can't speak for KY, but the way other states handle this is, you file jointly, and use the KY part-year/non-resident form(s) so that only KY source income, and worldwide income of your wife (a KY resident) is taxed by KY. Your Alaska income should not be taxable at all by KY, nor, of course, does Alaska tax your income.
Mark Bole wrote in news:hqas4l$7g9$ snipped-for-privacy@news.eternal-september.org:
I just wanted to make sure that she could claim them, as it actually works to our advantage. (AK has no income tax, so by her claiming them, it reduces our state tax liability.) They have lived with her for the entire year in KY, but I contribute 70% of the household income.
KY allows you to file MFS even if you file MFJ for fed. (and vice-versa)
I looked at that, but the only options given on the form for 'residency status' are:
Full-year nonresident Part-year resident Full-year resident of a reciprocal state
There doesn't seem to be a way to file MFJ and choose different residencies for the two individuals.
Kentucky allows married taxpayers the option to file separately, "combined," or jointly, regardless of their federal filing.
Whether your Alaska income is subject to Kentucky tax depends on whether you are or are not a Kentucky resident for income tax purposes. Kentucky defines a resident to include all persons domiciled in the state. Your domicile is your true, fixed home and permanent establishment; the place to which, whenever absent, you intend to return. The KY regulations state that a person does not lose a KY domicile until a new domicile is established somewhere else, and that absence for a fixed period or for incidental purposes does not change the person's domicile. Assuming you and your spouse are not estranged, and that you intend eventually to return to Kentucky to live, you are probably still a Kentucky resident taxable there on all of your income. However, if your intention is eventually to move the entire family to Alaska, or to terminate your marriage, you may have established a new domicile in Alaska. If so, you would be a KY tax resident only if you were to spend more than 183 days of any taxable year in Kentucky.
The determination of domicile requires analysis of all of the facts and circumstances of a particular case. Based on what you have posted, you may be either a resident or a nonresident of Kentucky for tax purposes.
If you are a resident, all of your income, from all sources, is subject to Kentucky tax. In that case you may find that separate or combined returns result in the lowest tax liability. Kentucky provides only a single tax rate schedule for all kinds of taxpayers, so on a joint return you get the benefit of the graduated rates (2% to
6%, with the highest rate kicking in at $75,000 of taxable income) only once, while on separate or combined returns you get it twice. However, if one spouse has losses that offset income of the other spouse, a joint return could result in a lower tax.
The difference between separate returns and a combined return is that both spouses are jointly and severally liable for the tax liability on a combined return, while each spouse is legally responsible only for his or her own tax liability if separate returns are filed.
If you are a nonresident your wife would file a Kentucky return as a full-year resident and report all of her income. Unless you have income from Kentucky sources (e.g., income from real or tangible personal property, such as rental property, in Kentucky, or income from a business carried on in Kentucky perhaps through a partnership, LLC or S corporation), you would have no Kentucky filing requirement.
BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here.
All logos and trade names are the property of their respective owners.