Hi,
I am a resident of Illinois and have a Illinois income, while my spouse is resident of Massachusetts and have a Massachusetts income for full year 2010.

Can we file Federal tax return as a married filing jointly and States tax returns as a married filing separately?

Thanks in advance for your help.

You definitely can file jointly on your federal return, but by doing so, you are probably OBLIGATED to file the SAME way on your state returns. Each state has different filing rules, so check out the instructions for both Massachusetts and Illinois.

Now, if you DO have to file joint on both state returns, the return can be adjusted so you pay taxes ONLY on the income earned ion each respective state.

If you are not sure HOW to do this, contact me at [email protected]. I do this kind of work on a routine basis.