Nonresident adjustment question: How to divide income for Military Spouse Non-resident and Spouse resident in Community Property state?

[ana]

Hello, so Military member and Spouse are domiciled in California. Right now military member is PCS/living in a different state but spouse is still in California. This makes the military member a non-resident but the spouse a resident in CA. There is a question about nonresident adjustment. "Enter wages, salaries, and tips you earned in California while you were a nonresident. If none, enter zero. Do not include active duty military wages earned unless domiciled and stationed in that California."

The military member only has wages from military pay. The Spouse has a W2 in California. However the phrasing of the question of wages earned while a non-resident does not apply to the spouse who is a resident in California. Or does it? Do you enter the Spouse wages for this question or leave this field zero since it says to excluding military pay + all wages were earned while spouse was a california resident?

[DanielV01 · Accepted solution]

For this situation, California want you to file a nonresident return as Married Filing Joint.  The military member is a statutory nonresident  to California because his military income while stationed outside of California is not taxed there and can be excluded from California tax.  However, the Spouse's income is included for California taxation, but taxed as Married Filing Joint instead of Married Filing Separately.  

If you file this way, community property laws will not affect their return.

[speedway121]

Hi Daniel, how does this change if he was not in the military.

IE ; the taxpayer was in TX and made $200k in non-CA sources (TX W-2)

adn the spouse was in CA and made $50k in CA sources

What do we report on the MFJ CA SCH 540 NR as taxable ca income? 

Is it 50k? 

[Critter]

multiple posts : https://ttlc.intuit.com/community/user/viewprofilepage/user-id/119542

[TomD8]

@speedway121 -- The entire $50K is CA-source income and thus taxable by CA.

Non-resident spouse's community property share is taxable by CA because CA taxes non-residents on CA-source income.

Resident spouse's share is taxable by CA because he/she is a CA resident.