working in DC, spouse working in CA

Starting in January, I took a job in Washington DC. Prior to that, my husband and I both work and live in California. We own a house in California. My husband is looking for job opportunities in Washington DC. Until that happens, I will be living in temporary places in DC.
We would like to continue filing our taxes jointly, but I don't know how to address the income tax issue. Is my income in DC taxable in California, and vice versa is my husband's income taxable in DC? Does it matter if I don't have a permanent residence in DC? Does DC have any agreements with DC such that we can just file jointly in CA and not file in DC?
I won't have a permanent mailing address in DC for while, so I can send my W-2 to my CA address or to a friend's address in Maryland or Virginia? Does it matter where I have my W-2 mail to?
Reply to
enribadeneira
wrote
Without looking up the laws for the state/District - yes - but.....They each should allow for taxes paid to other jurisdictions.
It's most likely that you'll be a part year resident of CA and DC with different part-year residency for your husband (if he moves by the end of 2008). Either way it works out, if there is income that is subjected to taxation in both jurisdictions, the residency jurisdiction generally gives a credit for the tax paid to the non-resident jurisdiction.
It's not going to be simple, so when the time comes, talk to a local CPA or EA for help.
DC probalby has some kind of agreements with VA and MD, but I doubt they'd have something with a state as far away as CA.
Nope. It matters where you were when you earned the income. That physical spot dictates which state gets to keep the tax. Where you are when you prepare your return, or where the W-2 gets mailed to is irrelevant.
You should get a PO box, or one of those mail drops at a UPS store so the IRS, CA, DC, etc and so on can get mail to you. Some address that would be considered the most permanent.
I live and work in a college town, and the kids who school and party here also work here. They may live in the dorms or apartments, but they give mom's address for the W-2's in most cases. Not that I'm implying you should use mom's address.....they know that the address they're at today, is most likely not the address they'll be at this summer, which is not going to be the address they'll be at this fall, or next spring.
Reply to
Paul Thomas, CPA
wrote:
Unless you're in one of the governmental or quasi-governmental jobs that exempts you from DC income tax, which I assume you aren't, you will pay DC income tax on your DC income if you live in DC. (If you are working in DC and living in MD or VA, you pay income tax only to the juridsiction in which you live. At the moment you are a resident of DC/MD/VA and your husband is a resident of CA, regardless of the fact that you have no permanent residence in the DC area.
Things are simple for 2007 since both you and your husband were full-year CA residents. For at least part of 2008 your husband will be a resident of CA and you will not. Look to the CA and applicable DC/VA/MD instructions for your options on dealing with this when you file your 2008 returns a year from now.
Taking you at word that you're talking about the W-2, have it sent where it's the easiest for you to get your hands on it when you prepare your return. Since I assume you already have your 2007 W-2, it's a little premature to be worrying about where you will have your 2008 W-2 sent a year from now. The mailing address on it is immaterial.
Reply to
Phil Marti
I wonder if this will be complicated because of community property rules. Here's is what I'm thinking of:
Say your husband makes 75k and you 100k. On 540NR which is at
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, you figure thetax on 175k minus deductions (line 20). Then divide that by 175kminus deductions to get the ratio (line 23), and multiply it by the CAtaxable income (line 22). I'm guessing the CA taxable income is 75k +100k/2 = 125k minus deductions. But DC is not a community property state and will like to tax the full 100k minus deductions. As a result, on your combined income of 175k, 125k + 100k = 225k of it is subject to tax, which doesn't sound right. IRS publication 555 does not seem to talk about this, but I might have missed something in it.
As an aside, I notice that in 2001, 540NR calculated the CA tax differently -- see
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figure the tax on 175k (line 22). But the ratio this time is yourCA AGI divided by Federal AGI (line 25a). Multiply the ratio by yourCA tax (line 25b). I'm not sure what difference this makes. In any case, 540NR seems unfair because it taxes CA source money at a higher rate. If you make 1k taxable income in CA, you probably pay 1% tax only. If you make 1k in CA and 100K outside CA, you pay 9.3% tax on your 1k CA income.
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