Already have the Form 8958, the instructions for 8958, and the IRS Community Property Pub 555 and have gone through all of it. All of the information on TurboTax and in IRS refer to community property and separate property (in the typical sense), but IRS does indicate that there are situratioin where community property laws are disregarded, and spousal agreements is one that "affects the status of property or income as community or separate property. Check your state law to deteremine how it affects you."
Have gone through Texas Family Code pertaining to separate vs. community property. It specifies (chp 3 Sec. 3.410 -- which specifies that the premarital agreement is: "effective to waive, release, assign, or partition a claim for economic contribution, reimbursement, or both" for couple's assets.
Texas Family code also specifies in Chp 4:
Sec. 4.103. AGREEMENT BETWEEN SPOUSES CONCERNING INCOME OR PROPERTY FROM SEPARATE PROPERTY. At any time, the spouses may agree that the income or property arising from the separate property that is then owned by one of them, or that may thereafter be acquired, shall be the separate property of the owner.
According to Texas Law, the premarital agreement signed by both parties (in this case) prior to marriage states in writing that each party in the marriage retains separate ownership of all income, debts, and assets of the original party and neither party has any claim, rights, or responsibilites to/for any income, debts, or assets from before the marriage or after the marriage.
The form 8958 is where the "sticking point" is -- how to complete the form to meet IRS requirements -- since EVERYTHING is separate for income, property, deductions, credits, etc. There is NO community basis for any classification -- per the written premarital agreement -- and have always been reported as belonging to the only one spouse in previous joint federal tax returns.
Example 1 - Interest income for the IRS form 8958:
Wife has two accounts that pay interest income. Husband has none. The two bank accounts from the wife ARE separate property. She owned them prior to the marriage and were listed in the premarital agreement as separate property.
Bank A Total $1500 Split information: Wife - $1500 Husband $0
Bank B Total $2000 Split information: Wife - $2000 Husband $0
Example 2 - Rental Income from Rent Houses
Wife has 2 rent houses -- purchased before marriage to current spouse - listed as separate property on prenup and are only in wife's name.
Husband has 2 rent houses -- purchased after marriage to current spouse. Both properties are in husband's name only, were paid for from his wages before retirement -- but mostly from withdrawals from his IRA. Both husband and wife agree that both of husband's rent houses are his separate property --which follows the requirements of the premartial agreement and Texas Family Law for separate property.
Wife's Rent house income: $25000 Husband's Rent house income: $17000
Form 8958 Entries:
Wife Rentals Total $25,000 Split: Wife - $25000 Husband $0
Husband Rentals Total $17,000 Split: Wife - $0 Husband $17000
Are these correct example entries of how the IRS form 8958 is to be completed with everything being separate income and property under Texas Family Law?
