Form 8958 Question

[nikhilp]

I am planning to do ‘Married Filing Separately’ this year.  I moved from Washington (community property state) to Tennessee (non-community property state) in 08/2024. Do I still need to include Form 8958 - Allocation of Tax Amounts Between Certain Individuals in Community Property States – even though my current state (TN) doesn’t require it. Or since we both earned income in a community property state -WA – we need to include form 8958? Please advise.

[MaryK4 · Accepted solution]

Yes, if you are filing separate returns and there is any community income for the tax year, you must file the 8958 with your return.  

[nikhilp]

Hi @MaryK4 ,

Thanks for your reply. However, reading https://www.irs.gov/publications/p555 , section : "This publication is for married taxpayers who are domiciled in one of the following community property states" confuses me. I no longer domiciled in WA, as we moved permanently to TN. Please advise.

[DaveF1006 · Accepted solution]

 Yes, you need to include Form 8958 when filing as "Married Filing Separately" because you earned income in a community property state (Washington) during part of the tax year. Here's why:

1. Community Property Rules Apply to Income Earned in Washington: Even though you moved to Tennessee (a non-community property state) in August 2024, the income earned while you were in Washington is subject to community property rules. This means that income earned by either spouse during that time is considered community income and must be split equally between both spouses for federal tax purposes.
2. Form 8958 is needed to share income, deductions, and credits between spouses in states where community property is owned by both spouses. Since part of your income was earned in Washington, you need to use this form to properly allocate the community income and deductions for the months you lived there.
3. After moving to Tennessee, the money you and your spouse made is no longer part of community property rules. However, the IRS requires you to account for the portion of the year you lived in a community property state.