Yes, because California is a community property state and the community property rules also apply to California RDP's, you would need to split your community income. A spouse's (or an RDP's) wages, earnings, and net profits from a sole proprietorship are community income and must be evenly split.
Any medical expenses paid out of community funds (such as wages) are divided equally. Generally, each of you should include half the expenses. If medical expenses are paid out of the separate funds of one individual, only the individual who paid the medical expenses can include them.
This TurboTax tips article on RDP has some good information. This IRS FAQ page may also be helpful.
Each domestic partner prepares a separate federal return based on the Allocation Worksheet that you attach to it.
For domestic partners, the "ours" aspect of your preparation covers community property income and deductions. Using the Allocation Worksheet from the IRS's community property publication 555, you can establish your shared, or community, income for each category of income such as wages, dividends and interest. Divide the totals in half to give each of you 50 percent.
California domestic partners file as individuals for federal filing, however, under California law, the state return must be filed as a married return. This requires the creation of a “mock” federal return that reflects joint-filing status. This is just to get the numbers you need to fill in the sections of your state return that use numbers from a "married filing jointly" federal return. This ”mock” federal return never goes to the IRS; you submit it with your California state return.
California is a community property state. When filing a separate return, each spouse/RDP reports the following:
- One-half of the community income
- All of their own separate income
Community property rules apply to the division of income if you use the married/RDP filing separately status.
See here for California FTB information on married or RDP filing separately.
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