Background:
My husband and I are both Texas residents with a valid separate property prenuptial agreement, ensuring all income is treated as separate property. My husband’s income is entirely sourced outside California, while nearly all my income is sourced from California. We plan to file our federal tax return as "married filing jointly."
Issue:
TurboTax defaults to suggesting a joint California non-resident return (Form 540NR) for us. However, this seems suboptimal because California:
Uses our total federal income (including my husband’s non-California income) to determine the California tax bracket, rather than only my California-sourced income.
Prorates deductions and credits based on the ratio of California-sourced income to total federal income.
Since our prenuptial agreement designates all income as separate property, I believe my husband’s income should not be included on my Form 540NR to optimize my California tax liability (e.g., lower tax bracket, higher deductions/credits).
Questions:
With a valid separate property prenuptial agreement, can I file my Form 540NR without including my husband’s income, reporting only my California-sourced income?
If so, does my husband need to file a separate Form 540NR, given he has no California-sourced income?
if so, how can I configure TurboTax to exclude my husband’s income from my Form 540NR (e.g., override the default joint filing suggestion)?
Any guidance on TurboTax settings or California tax rules would be greatly appreciated!
