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I am thinking about moving to New Mexico while my family will

remain in Georgia. At this...
I am thinking about moving to New Mexico while my family will remain in Georgia. At this point this arrangement is permanent thus we will maintain two permanent residences in these two states. Questions:
1) what are the tax consequences of maintaining two homes in two states (not rental)?
2) My wife will have income in GA and I will have income in NM? Any issues to be aware of in filing 1040?
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Answered in 5 minutes by:
8/17/2013
Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16,581
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
Verified

MyVirtualCPA :

Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.

MyVirtualCPA :

How are you today?

MyVirtualCPA :

In terms of your residency for state tax purposes, you will be a tax resident of New Mexico and she of Georgia

MyVirtualCPA :

Your federal income tax return will not be impacted, but you will have two state returns to file

MyVirtualCPA :

You will file in New Mexico as a resident and she will file in Georgia as a resident. You are not a resident of Georgia and she is not a resident of New Mexico

MyVirtualCPA :

You will owe tax in New Mexico on your New Mexico sourced income, and she will owe tax in Georgia on her Georgia sourced income

MyVirtualCPA :

You will still file joint returns in both states, but your residency will be considered on both returns such that her income is not taxed by NM and your income is not taxed by GA

Customer: The part I am still not clear is the two permanent residences (2 homes), one in each state, what is the tax treatment?
MyVirtualCPA :

You are still considered only a resident of NM and she's only considered a resident of GA

MyVirtualCPA :

For federal, there's no difference - you can still write off the interest and taxes on both houses

Customer: Do we need to use any other form except sch-A to detail out two separate in interest and tax to avoid any audit flag?
MyVirtualCPA :

No, you don't. Your social security numbers are reported on the 1098 forms that go to the IRS and the IRS will expect to see both deductions on your return

MyVirtualCPA :

They go on the same line

Customer: Excellent! Last two questions:
MyVirtualCPA :

Okay

Customer: What burden of proof we need beside w2 showing two state incomes?
MyVirtualCPA :

In your case it's pretty obvious that you are not a resident of Georgia and she not a resident of New Mexico

MyVirtualCPA :

It would be harder if you were in bordering states and within driving distance of each other

MyVirtualCPA :

Your W-2, and your drivers license will be in one state and hers in another. You have cars registered in two different states

Customer: Great, last questiion, any benefit on rental vs buying in NM since we have home in GA?
MyVirtualCPA :

Well, if you buy in NM you would get the tax break of the interest and taxes, where there

MyVirtualCPA :

is no tax deductible benefit of renting

MyVirtualCPA :

But, if you don't buy it will be easier to move back to Georgia

Customer: great advise, thanks:-)
MyVirtualCPA :

You're welcome. IF you would, please rate my response as "excellent" so that I may receive credit for assisting you today

Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16,581
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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Thanks, BJC for your positive rating. Please come back and visit MyVirtualCPA for any of your tax, finance, or social security needs. It was a pleasure working with you today
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Megan C
Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16,581
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Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

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