Regarding married filing separately, do you enter half of the combined total community property wages on the w2 section of the 1040 or only enter your own wages on 1040?

Forum|Forum|6 years ago
June 4, 2019
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I am married filing separately and live in a community property state with my spouse.

Under the 1040 section of the W2, do I enter half of the combined wages between my spouse or only enter my own wages and report the community property adjustments in the 8958 form/community property worksheet?

If combine and divide method, do I combine every item from both w2s (boxes 1- boxes 17)? If I combine, do I still need to enter anything in the community property income adjustments?

I am tilting towards the enter our own w2 in our own separate tax return and then the form 8958 will show the adjustments.

For example my wage is $60,000 and husband is $80,000. I enter $60,000 in my own 1040 and then the community property income addition adjustment is $10,000 on the 8958 form.

His tax return will have $80,000 on his own 1040 and then the community property income subtraction adjustment is $10,000 on the 8958 form.

TurboTax Deluxe Windows

CarolC

Employee

The software does not automatically support the community property reporting requirements for individuals who are married filing separately or who are registered domestic partners and have community property.

However, you will report half of your income and half of your spouse's income. You will also report half of any tax withholding for each of you as well.

The IRS says, "If you file separate returns, you and your spouse must each report half of your combined community income and deductions in addition to your separate income and deductions. Each of you must complete and attach Form 8958 to your Form 1040 showing how you figured the amount you are reporting on your return. On the appropriate lines of your separate Form 1040, list only your share of the income and deductions on the appropriate lines of your separate tax returns (wages, interest, dividends, etc.).

Report the credit for federal income tax withheld on community wages in the same manner as your wages. If you and your spouse file separate returns on which each of you reports half the community wages, each of you is entitled to credit for half the income tax withheld on those wages."

The reporting requirements are listed in IRS Publication 555, Community Property. Click the link below for more information.

https://www.irs.gov/publications/p555#en_US_201502_publink1000168793

"Tax Tip: When you file separately, you may lose certain credits and deductions. Figure your tax both on a joint return and on separate returns under the community property laws of your state. You can then compare the tax figured under both methods and use the one that results in less tax."

See the TurboTax FAQ below for additional information.

[Edited 4.9.18 | 9:51 PM]

https://ttlc.intuit.com/replies/3301943

jsltwlAuthor

@TurboTaxCaro Thank you for clarifying this confusing topic.

So, if we include half of my own and half of my spouse's income and tax withholding on the 1040, we should not enter any community property adjustments (additions or subtractions) under "other tax situations" because it would be counter intuitive from already including half of each income and tax withholding on the 1040, right?

On the 8958 worksheet/form, our taxes withheld should reflect the half each spouse is reporting from the combined total, right?

For example, my federal tax withheld is $6,000 and my husband's federal tax withheld is $8,000. On the 8958 worksheet, it should have the total amount of $14,000 in column A, $7,000 allocated to myself on column B, $7,000 allocated to my spouse on column C.

nataliacanada

Could someone kindly confirm -

RDP in community property state, this is what I've concluded I should be doing re: allocating community property.

1) create two individual federal returns, 2) Create Two columns in a spreadsheet, Partner 1, Partner 2 (similar to form 8958).

Community income = sum across {wages from W2 + taxable interest + oridinary dividends} across both partners.

Community deductions = sum across {allowed capital gain/loss, HSA contribution, qualified business income or loss, donations to charity, mortgage interest allowed, real estate taxes, state and local taxes, vehicle registration fees}. These have to be based on what Turbotax summarizes within each individual's federal summary given some of these can max out.

Community property = Community income - community deductions. Divide by two. Is that correct? That community property then needs to be adjusted in the Community adjustments screen for each partner (addition or subtraction). Submit alongside form 8958.

Is that correct, or is the community property adjustment just sum across {wages from W2 + taxable interest + oridinary dividends} across both partners, and then deductions take place following?

RobertB4444

Sum them separately - income gets added up and then divided by two and entered and then deductions get added up divided by two and then entered. The net total is the same either way.

@nataliacanada

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