Creating individual returns for taxpayer and spouse when full year residents of different states in Lacerte

Creating individual returns for a Taxpayer and a Spouse when each is a Full Year Resident of two different states.

Example: When a Taxpayer and Spouse have homes and jobs in two separate states for the year.

To resolve this situation using Lacerte:

Three separate returns will need to be created.

• First Return: Joint Federal Return as FY US - This can be split using the Split Joint Return function to create two MFS returns in addition to this return)
• Second Return: MFS Taxpayer Return as FY State - This will be used to file the State return.
• Third Return: MFS Spouse Return as FY State - This will be used to file the State return.

1. Create a MFJ return with 'US' as the Resident State as of 12/31 in Screen 1, Client Information.
2. In the Filing Status section, check the box for MFJ vs MFS Comparison and Live With Spouse?.
3. Enter both Taxpayer and Spouse income and deductions, using any Taxpayer/Spouse indicators on each input screen.
4. Review the MFJ/MFS Wksht in the Forms view to verify the amounts reported in the Taxpayer and Spouse columns.
5. Click the Click here to split this return link available at the top of the MFJ/MFS Wksht to split the return.
   • This will create two additional returns.  One for Taxpayer and one for Spouse.
6. In each of the MFS returns created, select the Resident State as of 12/31 in Screen 1, Client Information.
7. Verify the income reported in each of the MFS returns and make any state specific modifications/additions.

Once complete a MFJ Federal return will be filed and two MFS State returns will be filed (three tax filings).

Important Note: Each state has its own rules on how this can happen. It is important that you are aware of how the state treats this situation. Some states (NY and WI for example) allow MFJ with the spouse as a nonresident; other states (IL for example) do not.