Spouses Filing Different Returns (Mixed Residency)
In selecting the proper residency status, married couples sometimes find that no one status completely addresses their circumstances. The filing of two returns for the taxable year, using different residency statuses, may be necessary in such cases. Examples are discussed below.
The most common instance of mixed residency status occurs when one spouse is a Virginia resident and the other is a nonresident
who has no liability
in Virginia. Married couples frequently encounter this situation when one spouse is in the military, stationed in Virginia, and claims another state as his or her home of record. In a case like this, the resident spouse must file a separate return under Filing Status 3. The resident spouse may not automatically claim all of the exemptions for dependents
or all of the itemized deductions reported for federal income
tax purposes. Federal rules must be applied to determine the allowable amounts. As a general rule, the spouse claiming the exemption for a dependent must be reporting
at least half of the total federal adjusted gross income. In addition, the spouse must be able to support his/her claim of itemized deductions. If the itemized deductions cannot be accounted for separately, the deductions may be allocated proportionately between the spouses, based on their shares of total income from all sources. If the nonresident spouse has any Virginia source income to report, he/she must file a separate return on Form 763.
In a case where one spouse is a full-year resident and the other is a part-year resident, the couple can file a joint or combined return on Form 760-PY. Appropriate residency dates must be entered for each spouse. In this situation, the full-year resident will not be allowed to subtract income from other states, and will not be required to prorate personal exemptions
. If the couple chooses to file separate Virginia returns, the full-year resident must file on Form 760. If separate returns are filed, the rules for allocating personal exemptions and itemized deductions discussed above must be applied.