Hello - Thanks in advance for all the help!

My wife worked in NC from 1/1/08 - 7/25/08, relocated to KY from 7/25/08 - 9/18/08, then back to NC for the rest of 08 (with no income). While in KY, she had 3 jobs and made less then $1000.

Question is, do I need to file like this:

NC - Joint - Husband (Full Year) Total, Wife (Part-Year) <---What she made in NC for 2008.
KY - Joint - Husband (Non-Resident) None, Wife (Part-Year) <----What she made in KY for 2008.

Is this correct?

Also - She had a non-fault accident which cost $20,000 + in medical expenses. Pending lawsuit, we should get all that cash back and some. We paid $11,000 last year, and $9,000 this year. Should we claim them as medical expenses even if we expect to receive a settlement?

Thanks again!

If she made less than $1,000 in Kentucky, she probably has no legal requirement to file due to the low income. She may WANT to file to recover any withheld state income taxes, though.

As to claiming the medical expenses, I would hold off claiming the deduction, as you then have to claim the medical portion of the settlement as income.

You can always go back and amend the return if necessary.