Accounting for California Tax Refund from previous year

[Fgarza2146]

My wife and I filed jointly last year, and this year we will file separately. 

How do I account for California’s tax Refund from last year? Do we split it and manually enter half the refund on our return?

[MonikaK1]

Yes, you would split the refund if it was community income. California is a community property state. When filing a separate return, each spouse/RDP reports the following:

• One-half of the community income
• All of their own separate income

Community property rules apply to the division of income if you use the married/RDP filing separately status.

If you’re married/registered domestic partner (RDP), you may choose to file separately. Each spouse or partner will prepare a separate tax return and report their individual income and deductions.

• Tax rates are higher for the married/RDP filing separately filing status
• If one person files itemized, the other spouse/RDP must file itemized as well
• Generally, you do not qualify for Earned Income Tax Credit (EITC) or Child and dependent care credit. Check the CALEITC eligibility page for more information.
• Standardized deduction is reduced (1/2 of married/RDP filing jointly)

See this California FTB webpage and IRS Publication 555 for more information.

[Fgarza2146]

@MonikaK1 

So to be clear, we spilt the amount on the 1099-G in half since we both are named in it?

[MindyB]

Yes, that is correct.  Divide the amount in half, and you will each report half. As @MonikaK1 mentioned, you both need to agree to itemize or take the Standard Deduction on your separate returns.