Hi Folks,
I am running into difficulty with using TurboTax CD for a "Federal tax married filing jointly, AZ state (community property) tax married filing separately" scenario.
1. For 2021, I was a married resident of AZ, which is a community property state.
2. My wife worked in AZ for 10 months of 2021, then moved to TN for work (I remained in AZ for the balance of the year). TN had no income tax in 2021.
My understanding is that my wife would need to file a part-time AZ resident tax return on her AZ earnings, and I need to file a separate resident AZ tax return. We will file a joint federal return. I read the instructions on how to use TurboTax for separate state return filing using mock federal returns.
What I am unclear on how to correctly deal with TurboTax adjustments to income due to AZ being a community property state. I understand that each person's income is 1/2 of combined couple income. Since this adjustment would not match W-2s, I wonder how to do this properly. While theoretically there should be tax savings due to AZ not taxing her TN earnings (and no TN state income tax), I wonder if TurboTax is robust enough to prepare a proper filing that would stand up to an audit.
Appreciate your expert thoughts!
