Thomas and Dolores Mills are married and have two children, Amy and Patty. They

Question

Thomas and Dolores Mills are married and have two children, Amy and Patty. They lived in Dallas Texas through July. They sold their home (for a loss) on August 1, they changed their domicile to Lansing Michigan.

Income items for the Mills family:while domiciled in Texas. Wages for Thomas in Texas $45000, Interest for Thomas $500. ordinary dividends for (Dolores's inheritance $2300.) unemployment for Thomas $2600

Income while domiciled in Michigan (Assume that no community funds went with them to Michigan) Wages for Thomas.$27500. Ordinary nonqualfiled dividends for Dolres $1300.

The Mills will file separate federal income tax returns. What amount of wages and unemployment will Thomas report on his Form 1040?

Explanation / Answer

Since, Texas is out of one of the 7 states in USA which does not have their State Income Tax.

Therefore, Thomas can report the Wages (Line No.7) to in Form 1040 = $ 45,000+$27,500=$72,500. He can show the income earned in Michigan State as to be taxed under partial year's resident status, thus saving the State Income tax to be paid in Michigan State.

Unemployment Compensation (Line No.19) to be shown in Form 1040=$2,600

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