How do I prepare a joint federal return and separate state returns?
If you and your spouse are filing a joint federal return but you work in—or are residents of—different states, you may need to file separate state returns.
Sometimes this is required by state tax law; other times this is the only way you can prevent TurboTax from taxing the nonresident spouse's income in the wrong state.
You can use TurboTax to file separate state returns, but you'll need to use the CD/Download software version to do this.
Tip: If you already started your return in TurboTax Online, we recommend that you transfer your tax file to the software version. You will save money by paying only once for multiple federal returns, and save time by entering less information.
Here's a brief overview of the procedure, see the sections below for detailed steps:
- You'll prepare one married-filing-jointly (MFJ) return to file with the IRS.
- Then for the first taxpayer, you'll prepare their "mock" Married Filing Separate (MFS) federal return and one state MFS return. This mock MFS return contains only the first persons income and their half of the deductions from the real MFJ federal return. This ensures that TurboTax only transfers the first spouse's income to their married Filing Separate state return. File this MFS state return, but not the mock federal return that it pulls the information from.
- Repeat these steps for the second taxpayer (spouse), creating a second "mock" MFS federal return. Again, this mock return will only contain the second persons income and their half of the deductions from the real MFJ federal return. File the second MFS state return, but not the second mock federal return that it pulls the information from.
Be sure to name each TurboTax federal return so you know which federal return to file and which state return is for which person. For detailed instructions, click the link for the taxpayer(s) that need to file a state return, below.
The primary taxpayer is the first taxpayer listed on the return.
- In the TurboTax software program:
- open your completed married-filing-jointly (MFJ) return, and
- then save it with a new file name,
- this will be your "mock" federal MFS return and real MFS state return.
This step ensures that your original joint return (the one you file with the IRS) remains intact for you records. You'll use the "mock" tax return to eliminate your spouse's data so it doesn't transfer into your state return.
- On Personal Info, click You & Your Family.
- Scroll down to the Your Filing Status section and click Edit.
- For the filing status, select Married filing separately, and then click Continue.
- On the Review Your Filing Status screen, check Change my filing status and on the dropdown check Married filing separately, then click Continue.
- Revisit topics in your federal return to remove all income items that belong to your spouse (e.g., Forms W-2 or 1099). Also remove all deductions that apply specifically to your spouse (e.g., medical or educational deductions). You'll also need to determine how to split any joint deductions.
- When finished, run the federal error check (Wrap-Up tab > Final Review).
- Now click the State Taxes tab and complete your state return.
- When finished, print the state return for your records and file the state MFS return.
Important: Do not file the "mock" MFS federal return you created here. It was only needed to separate the primary taxpayer's income and deductions for state tax purposes. However, do not delete the return in case you need to view or amend the taxpayer's associated state MFS return.
The secondary taxpayer is the spouse of the primary taxpayer, as listed on the return.
Unlike the steps above, you'll be creating a new "mock" federal MFS return for the spouse.
This is necessary because it's not possible to switch primary and secondary taxpayers in TurboTax, nor is it possible to remove the primary taxpayer and only keep the spouse.
- In the TurboTax software program, start a new return by choosing New Tax Return from the File menu, and then clicking the Start a New Return button on the screen.
- On the transfer screen, select Continue Without Transferring. Do not transfer information from last year's joint return!
- Create the "mock" federal return using the secondary taxpayer's personal information, income, and deductions. For the filing status, choose Married filing separately.
- Be sure you do not include any deductions already claimed by the first taxpayer. Only the spouses' income and deductions should be entered in this return.
- When finished, run the federal error check (Wrap-Up tab > Final Review).
- Now click the State Taxes tab and complete your state return.
- When finished, print the state return for your records and file the state MFS return.
Important: Do not file the mock MFS federal return you created here. It was only needed to separate the spouse's income and deductions for state tax purposes. However, do not delete the return in case you need to view or amend the spouse's associated state MFS return.
