According to the Virginia tax website, the point of allocating income and computing the spousal adjustment is to prevent spouses from having to file separate individual returns to lower their overall tax bill. It addresses the "marriage penalty", and lowers the total tax bill for joint filers to what it would be if they filed individually. TurboTax allocates income based on the entries for each type. W2's and 1099s generally have an SSN or tax ID associated with them. For interest and dividends hand-entered without an SSN, TurboTax asks which individual the income belongs to, or if the income belongs to both (for joint accounts). TurboTax then uses this information to fill in the Virginia Spousal Allocation worksheet which computes the adjustment and lowers the tax due.
