How do you calculate federal income after non-refundable credits between spouses? Where is this number found to use for a calculation? Can it be $0?

[LenaH]

It depends. If your income would be $0 after you spilt all of your income and non-refundable credits, then you enter $0. However, it is best to do the calculation to ensure it is correct.

Generally, if you lived in a community state and are filing married filing separately, you would use Form 8958 to allocate amounts between spouses. 

To access this form in TurboTax, please follow the steps below:

1. Open your return.
2. Search 8958 with the magnifying glass tool at the top of the page.
3. Click the Jump to 8958 link at the top of the search results.
4. Follow the on-screen instruction and TurboTax will guide you through the calculation. 

For more information, please see What is Form 8958. 

For detailed instructions on Form 8958, please see the IRS instructions for Form 8958.

[AHelp]

How do I calculate this?  There was a number that was prefilled under my name.  Do I use that number and just prorate with my spouse?  Where did that number come from?

[DaveF1006]

It depends. if you live in a community property state such as  Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin, you will need to prorate 50/50.If you live in any other states, you can prorate any amount you wish as long as you are in agreement with your spouse because if you claim all the credit for yourself, then when they file their return, they can't claim any. if they do, it will trigger an audit.

[AHelp]

If we do not live in a community property state and file as married filing separately on combined return then I could show the whole amount under my name or do I need to prorate with my husband?  Also can you tell me what goes into the number that was calculated?  The number was prefilled for me.  Thanks!

[DaveF1006]

It depends. It is difficult to tell how the number were calculated without being able to look at the specifics. What state is this in? 

[AHelp]

Iowa

[AHelp]

So if I live in Iowa I can leave the full amount under my name and put 0 in for my husband if we agree to that?  It seems we get a larger refund when it is all under my name.

[SamS1]

If both you and your spouse have income, its best to file married filing separately as Iowa only has one tax rate schedule, unlike the Federal tax rate schedule where there are four.  Splitting your income will lower the amount of tax in Iowa since both your incomes will get the advantage of the lower tax rates.  Iowa requires a proration of the Federal tax paid deduction based on each spouses proportional share of the combined income.  Here is a link that might help with the calculation.

The pandemic has affected your taxes in many ways. Including reporting in TurboTax the amount of stimulus money you received. Click Here for more information on how the Pandemic affected your 2020  taxes.

[AHelp]

so file married filing separately on combined return on married filing separately on separate returns?

I was thinking it is best to file separately on combined return but I still need to prorate based on income?  I can't just leave the full amount under my name?

[AHelp]

I know the federal income tax refund needs to be prorated based on income but when it comes to federal income tax after non refundable credits - does this need to be prorated based on income as well?  For the non-deductible taxes it says to prorate based on income but shouldn't it match the W2's?

[LenaH]

If you both filed separately, you and your spouse would have two different set of returns. It is not a combined form. Therefore, you would enter your information in one return and your spouse's income in another. There is no allocation or calculations necessary. Since each return will only show their tax information, each return would be calculated specifically for each spouse. 

Both of your returns would still need a 1040 and an Iowa return.

For more information, please see How do I switch from filing jointly to filing separately?

@AHelp