TurboTax doesn't do this properly and it can cost you a lot of money in lost tax refunds. When you enter W-2 wages and tax withholdings you enter half the values that are on your W-2 form. You then enter your spouse's W-2 forms as if they were yours. Again entering half values. This results in 1040 Line 1 being correct, which is important for other forms, such as Schedule 8812. Likewise, for Interest and all the other things on Form 8958.
You then leave the Community Property Addition Adjustment & Subtraction Adjustment empty. Note the name of the Subtraction Adjustment implies that it will be subtracted for you, but actually, if you put something there it has to be a negative number. There should be some description of this on the IRS Free File form of TurboTax!!!
You should also leave the Tax Withholding Adjustments empty.
The Community Property - Wages screen is where you enter the information that explains what went into your W-2s. For each of your and your spouse's employers, you put half the W-2 wage under the You column and half under the Spouse column.
Finally realized it when I noticed that I was not getting $661 of Additional Child Tax Credit (form 8812) that other tax software showed me to be getting. TurboTax was mistakenly putting my share of my spouse's community property wages on Line 7a Other Income Schedule 1.
