My wife and I are retired, and have 2 houses, based on where the grandkids live. We split our year between Utah and Arizona. The AZ home has a $40K mortgage balance, the Utah house is paid for. Utah has a flat tax
with no deductions
social security. AZ does not tax social security.
MY retirement income is half of my wifes, about 35K for me, $70K for her.
Rather that file joint returns in each state, we want to split our residency. I have a utah license and vote in Utah, she has an AZ license and votes in AZ.
It appears that we can file seperately on the federal, splitting 50/50 our deductions, and then file in our respective states as tho she is full time in AZ and I am full time in Utah. With my income being so low compared to hers, the Utah rates don't affect me much, and as time passes more of my income will become tax free as I have a progressive neurological disease and the Veterans Administration will be increasing my compensation as the condition gets worse, plus at the same time my navy retirement will shift from taxable to non taxable. Eventually, Utah will be taxing only my social security plus a small civilian job pension.
Can we do this? Each of us declare a state as tho we live there all year and forego the half year tax returns
for 2 states..?