MFJ Federal & MFS in Community Property State

Forum|Forum|4 years ago
January 26, 2022
1 reply
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I'm active duty, California resident, and my wife is civilian, Texas resident. We both live and work in Texas. She doesn't require a state tax return for Texas because of no income tax. Am I able to just file joint for my California return, or does her working in her state of residence prevent me from doing that?

My confusion is that when I go to file separately I now have to add in all the community property adjustments, which halves my California return because now part of my withheld taxes are registering as hers. Which would then mean I would have to file a California tax return for her. Or do I not put state taxes in that portion of the adjustment?

MAK70

An individual domiciled in California when entering the military is considered a nonresident while stationed outside California on permanent change of station (PCS) orders.

Nonresidents pay tax on California sourced income, so if you only have income from Texas you do not have to file a California tax return.

rthom17Author

I get how my tax situation works regarding my nonresidency filing status with California. My concern is with how my wife's situation affects mine. I paid taxes to California so to get it back I need to file a nonresident return, but as soon as I begin to fill out my state tax portion as MFS (after filing federally as MFJ) turbotax flags me to do community property adjustments. In the process of doing the adjustments I no longer get my entire taxes back from California because now half of the taxes I paid are considered my wife's taxes (who should be considered a nonresident, not working in California).

My question is: am I filing my state taxes incorrectly? Should I just file jointly state as well to get my California taxes back or am I doing the community property adjustments wrong and don't need to add state taxes into that?

DMarkM1

You should file a joint non-resident CA state return taking advantage of Active Duty and Military Spouse statuses. Exclude all income from CA and that will result in a refund of the CA withholding amounts.

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