[mud57]

Hi,

My wife and I own our home in Texas, a community property state. We are both licensed to drive and registered to vote in Texas. She works full time in Texas. I have recently been transferred to DC to work. Apart from my income at work, I also have a military pension. Additionally, together we received income from capitol gains. I am in a mess trying to sort out how much income should be applied to DC. :confused: I think DC wants to be greedy and tax me for income that should not apply to them. Our property taxes in Texas are high but we do not pay state income tax.

If DC wants to tax my military pension and our capitol gains then can I proffer that half of all income is my wife's because Texas is a community property state and they are therefore only entitled to tax that 50% of income? Iaccept that they want to tax all of my income earned in DC but do not feel that should entitle them to tax everything when I am in reality only an unwilling resident of DC (but a resident nevertheless since this is where I am earning my income).

Thanks for considering this! ;)

[AtlantaTaxExpert]

The HALF of military pension due to community property state provision argument will fly, but it works BOTH ways. If you make that argument, then DC can argue that half of your wife's Texas income should be taxable by DC under the same community property state provision.

[ebaines]

You need to determine where your princiapl residence is. If you spend more than half the year in DC, then you are a DC resident, not a TX resident - it has nothing to do with where you might own a home or where your driver's license is issued, but rather depends solely on where you sleep at night. Unless you can show that you spend fewer than half the year's nights in DC, they will consider you a resident. If that is the case, then DC will indeed tax all your income. Your wife, on the other hand, is a TX resident, and so her income should not be subject to DC tax - you may find it advantageous to file in DC as Married Filing Separately, even though you file as Married Filing Jointly for the feds.

[AtlantaTaxExpert]

Ebaines makes excellent points, especially about filing Married Filing Separately.