Enter the Schedule C information, income, and expenses, in the name of the spouse whose business is to be shown on the Schedule C. Self-Employment Tax is calculated on their net business income.
The community property split is a separate calculation. To find the interview for Federal Community Property Income, Form 8958, try the steps in this help article.
List on the community property income worksheet the net profit from the business along with other community property income. Allocate half of the community property income to each spouse. The worksheet will show how much to add to or subtract from each spouse's income on their separate returns.
When you live in a community property state and file separate returns, you generally each must report 50 percent of your spouse's income and half of the income generated by community assets, plus all of your separate income. The IRS has an allocation worksheet to simplify your calculations in Publication 555 Community Property. You also have to decide who will claim dependent children.
The Internal Revenue Service (IRS) created Form 8958 to allow couples in community property states to correctly allocate income to each spouse that may not match what is reported to the IRS. The rules for the state returns may differ.
If you are filing a joint return, you don't need to do a community property split.
Please see this TurboTax tips article and this help article for more information.
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