Residency/Withholding Issues
I have (2) separate questions, so hope this is OK.
My first question concerns State Residency issues - here is the situation: My husband has been living and working in New Mexico since mid-February 2011, as he was unable to find full-time work in California, which is where we have lived the past 20 years, and have a home. However, I as his wife, have not yet moved to New Mexico, as we need to sell our California home before I can move to New Mexico. We just decided to put our home up for sale versus renting it out. I also have our 21 year old son, who is a college student, living with me in our California home - he will be moving mid-September 2011 to live full-time on the university campus, where he will be attending college. We hope to sell the home by September or October, so I can then move to New Mexico to be with my husband. My husband has been living in a hotel in New Mexico since beginning his employment there in mid-February, so we have been paying for his hotel stay, as well as for our mortage on our California home. We normally file taxes as married, filing jointly.
My question concerns Residency issues: Would my husband be considered a California resident or a New Mexico resident? He still has his California driver's license and registration, and our auto insurance is still being covered by our California insurer - my husband will be updating his DMV records, etc. to New Mexico next year, once he knows that his job in New Mexico is secure. Since I, as his wife, am clearly a California resident for 2011, would we need to file separate tax returns, or should we still file as married, filing jointly, and complete tax returns for both New Mexico and California? I have read that you are a resident of the State where you intend to reside, based on your actions, work history, etc., so NOT SURE which state the IRS would consider my husband a resident of for 2011. Please advise.
My 2ND/SECOND QUESTION concerns tax withholding for myself(the wife): I opted for early retirement in January 2011, based on an extended illness in 2010. I will be collecting a retirement pension from my ex-employer, a Bank, beginning November 2011. My approx. monthly pension, before taxes, will be $1822 each month - I will not be making any additional income of my own at this time; my husband currently makes $85,500 per year, before taxes. I am needing to know how to calculate how much in both Federal and State taxes I would need to have withheld, as I want to only pay them whatever is necessary to NOT be penalized for not having enough taxes withheld during the year. Is the right or best way to calculate this to have them take 15% for Federal, since my making approx. $22,000 per year puts me in the 15% tax bracket, and then have them take 4.5% for New Mexico state withholding, since this is their state tax amount. By my calculations, I would then have them withhold approx. $274 for Federal, and approx. $82 for State. Does this sound about right? Please advise. THANK YOU FOR YOUR HELP WITH BOTH MY QUESTIONS!!!
Maureen M.
