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Marieta
Level 1

Community property income one spouse part year in CA, other spouse always in NY

Hello,

 

I'm trying to fill my taxes but I'm finding it very hard this year since I got married in 2019. I was living in California until July 2019, but I got married to my husband in mid May 2019. He has always lived in NY, and I moved to NY in July after my contract in CA expired. 

My husband decided to fill separately without telling me and he never reported community income. Now I'm tryin fill my taxes using Turbotax(separately of course), but it's really messy. 

I have replied yes to the question "Do you have any community property adjustments or community income to report for 2019?". Then, I was shown the screen "Community Property Income Adjustments", where I put:

- $0 in "Community Property Addition Adjustment" since all my husband's income is earned in NY and he was never CA resident.

- I calculated the sum of my CA income and bank interest divided by 7 months (that I lived in California) and multiplied by 2.5 months that I was married while living there. I divided this number by 2 and include it into "Community Property Subtraction Adjustment".

 

Then I subtracted the proportional "Tax Withholding Adjustments" for those 2.5months over 7 months divided by 2.

 

The problem comes when I get to the screen "Community Property - Wages". It's automatically filled by TurboTax with all my income in the year, both in CA and NY. Should I change that screen so that it only shows the part I earned in CA during the 2.5 months I was living there while married? Also, should I assign half of that income to my husband and half to me?

Another surprising thing is that the "Community Property Subtraction Adjustment" I made in the beginning is then shown as "Community Property - Other Miscellaneous Items". Is this correct?

 

Many thanks!

 

6 Replies
macuser_22
Level 15

Community property income one spouse part year in CA, other spouse always in NY

Income allocation when both spouses live in the same state is usually split 50/50, however when one spouse lives in a community property state and the other does not (or part years)  , then it can be very difficult even for tax professionals because it depends on the laws of both states and often they are in conflict.  In most cases this is best dealt with by using a tax professional that specializes in these special circumstances and knows the laws of each state - not easy to find.

 

To avoid all of that most people file jointly.

 

If you file MFS (Married Filing Separately) keep in mind that there are several limitations to MFS.  Married filing Jointly is usually the better way to file.
 
A few of those limitations are: (see IRS Pub 17 for the full list

https://www.irs.gov/pub/irs-pdf/p17.pdf page 21

1. Your tax rate generally is higher than on a joint return.
2. Your exemption amount for figuring the alternative minimum tax is half that allowed on a joint return.
3. You cannot take the credit for child and dependent care expenses in most cases, and the amount you can exclude from income under an employer's dependent care assistance you are legally separated or living apart from your spouse, you may be able to file a separate return and still take the credit. For more information about these expenses, the credit, and the exclusion, see chapter 32.
4. You cannot take the earned income credit.
5. You cannot take the exclusion or credit for adoption expenses in most cases.
6. You cannot take the education credits (the American opportunity credit and lifetime learning credit) or the deduction for student loan interest.
7. You cannot exclude any interest income from qualified U.S. savings bonds you used for higher education expenses.
8. If you lived with your spouse at any time during the tax year:
a. You cannot claim the credit for the elderly or the disabled, and
b. You must include in income a greater percentage (up to 85%) of any social security or equivalent railroad retirement benefits you received.
9. The following credits and deductions are reduced at income levels half those for a joint return:
a. The child tax credit,
b. The retirement savings contributions credit,
10. Your capital loss deduction limit is $1,500 (instead of $3,000 on a joint return).
11. If your spouse itemizes deductions, you cannot claim the standard deduction. If you can claim the standard deduction, your basic standard deduction is half the amount allowed on a joint return.

- If you live in a community property state you must allocate community income between both spouses..
-
- Community property states.   If you live in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin and file separately, your income may be considered separate income or community income for income tax purposes. See Publication 555. http://www.irs.gov/publications/p555/index.html

 
See this TurboTax article for help with this.
https://ttlc.intuit.com/questions/1894449-married-filing-jointly-vs-married-filing-separately

https://ttlc.intuit.com/questions/1901162-married-filing-separately-in-community-property-states

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
Marieta
Level 1

Community property income one spouse part year in CA, other spouse always in NY

Thanks, but this hasn't answered any of my questions. 

macuser_22
Level 15

Community property income one spouse part year in CA, other spouse always in NY

I do not think anybody in a public forum can answer a question that requires knowing all the personal details and researching both CA and NY laws on this matter.    That is not a straight forward tax question that is easy to answer.

 

As the IRS states in Pub 555:

 

Generally, the laws of the state in which you are domiciled govern whether you have community property and community income or separate property and separate income for federal tax purposes.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
Marieta
Level 1

Community property income one spouse part year in CA, other spouse always in NY

The question was not related to personal details or anything related to California or New York law, it was just about TurboTax. You just replied something totally unrelated.

macuser_22
Level 15

Community property income one spouse part year in CA, other spouse always in NY

Your question:  "Should I change that screen so that it only shows the part I earned in CA during the 2.5 months I was living there while married? Also, should I assign half of that income to my husband and half to me?"

 

Again, I cannot answer because it depends on how CA and NY laws say to split it in this situation. There is very little guidance in this situation and TurboTax only gives very general information. 

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
macuser_22
Level 15

Community property income one spouse part year in CA, other spouse always in NY

I would suggest that you call customer support so you can discuses this on-on-one in real time.  (I do not think they are open today on Easter).

 

There is no single published number because it changes contently depending on the nature of the call and agent availability. Following the link below will either give a current number for you to call or take your number for a callback.

(Note that phone support is for paying customers only. There is no phone support for Free Customers. unless you upgrade to Plus)

Here is a TurboTax FAQ for contacting customer support.

https://ttlc.intuit.com/questions/1899263-what-is-the-turbotax-phone-number


**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
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