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DAVE9235 · Jul 14, 2010, 09:59 AM

My wife has a small LLC business (single member) and operates and works along on this schedule C business in WV where together we own a residence and she lives year round. Though we jointly own the residence in WV, I currently (2010) reside (apartment rental) and work as a W-2 employee for a company year round (2010 being my first at this). Though I return to WV frequently throughout the year on weekends and occasional long weekends where I might even work remotely from WV for my job during such time as a salaried exempt employee for my employer, I am having both NC and WV withholding deducted from my paychecks. What status(es) would you recommend I file my wife's and my federal and state(s)tax returns for 2010, would I be considered a resident in both states being that I own property in WV but work and reside the majority of the year in NC, and lastly if I were to file a return married and separately, would I be able to claim (entirely or proportionately? ) the applicable mortgage interest and real estate taxes paid in 2010 against my own separate return as opposed to my spouse who I jointly own the residence in West Virginia with? I appreciate you advice. Thanks... Dave

ebaines · Jul 14, 2010, 11:47 AM

First, you can be a resident of only one state at a time (there is no such thing as being a resident of two states simultaneously). It sounds like you are a resident of NC and your wife is a resident of WV (I am assuming that you spend more nights in NC than WV, right?) Assuming that you have no WV source of income and that your wife has no NC source of income, then you can actually file separate state tax returns even though you file a joint federal return. This is only allowed if you were not a resident of WV at any time during the year, and your wife was not a resident of NC at any time during the year, and neither of you has any income sourced from the othres' state of residence. This doesn't mean you're not allowed to visit WV, or even own property there - just that you not reside there or earn income there. You should be voting in NC, have your car registered there, etc. With this arrangement there is no reason for you to have WV tax withheld.