Community Property Adjustments

[sarenanoelani]

I am an RDP in California, so needing to file as single for federal taxes but jointly in CA, which is a community property state. This is my first year in this situation and have a few questions.

• How do we handle the community income adjustment? We are considering everything community property to keep it simple (rather than specifying anything as separate property). It seems like we each enter the information for our personal taxes according to our documents, and then when we get to the community property income adjustment question we say yes? How do we calculate the number? It is just adding the totals between the 2 of us, and then dividing by 2 and seeing what the difference is?
• We weren't sure where the taxes withheld number got pulled from in the Turbo Tax system on form 8958 since it didn't match what is on our W2s.
• Is it required to do a tax withholding adjustment as well or can we keep it the same? (I am wondering if it is a must for us to send via mail or if we can still e-file somehow.
• Lastly, we've both walked through everything in TurboTax online but it won't let us get past the review without downloading desktop. i'm wondering if we can still decide to go with online to take advantage of the MetLife benefit we have with TurboTax? Then my partner would pay for his online?

[ThomasM125]

You do need to add your two incomes together and divide it by two to determine your share of community property income. You then subtract from that amount your income to determine your community property income adjustment. If your income is less than your share of community income, the adjustment would be positive and negative if your community property income is less than your income.

You may have taxes withheld from other sources than your W-2 forms, such as 1099 forms. That may explain why the taxes reported in TurboTax do not match your withholding reported on your W-2 forms. You should add the tax withheld together and divide by two to determine your community property tax withholding. You are required to adjust your tax withheld for community property purposes.

I'm not sure what problem you are having filing online. However, since you are required to file two separate returns, it may be less expensive even with the discount you mention to file using the desktop program, as you can file both returns for the price of one product for the most part.