If you file jointly for California, you won't need to allocate community property. Massachusetts is not among the nine community property states so the issue doesn't apply there. When you live in a community property state and file separate returns, you each must report 50 percent of your spouse's income and half of income generated by community assets, plus all of your separate income.
Please see this TurboTax tips article for more information.
The California Franchise Tax Board's Form 540 Instructions state the following on this topic:
Use the same filing status for California that you used for your federal income tax return, unless you are an RDP (Registered Domestic Partnership). If you are an RDP and file single for federal, you must file married/RDP filing jointly or married/RDP filing separately for California. If you are an RDP and file head of household for federal purposes, you may file head of household for California purposes only if you meet the requirements to be considered unmarried or considered not in a domestic partnership.
Exception: If you file a joint tax return for federal purposes, you may file separately for California if either spouse was either of the following:
- An active member of the United States armed forces or any auxiliary military branch during 2024.
- A nonresident for the entire year and had no income from California sources during 2024.
Community Property States: If the spouse earning the California source income is domiciled in a community property state, community income will be split equally between the spouses. Both spouses will have California source income and they will not qualify for the nonresident spouse exception.
The Massachusetts tax agency states that, for tax years beginning on or after January 1, 2024, married couples must file a joint Massachusetts return if they filed a joint federal income tax return, unless one of the spouses wasn't required to file a Massachusetts return because their Massachusetts gross income was $8,000 or less.
Yes, TurboTax can handle joint Federal and separate State returns. It's best done using a Desktop version. See this help article for step-by-step instructions.
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