Gambling Winnings - Married Filing Separately in California

[able88]

Hi! We live in California and normally file married jointly, but this year it would most likely benefit us to file separately for a couple of unusual reasons (I did both methods in Turbo tax and filing separately results in a larger refund).  However, before I know for sure, my question is how to treat gambling winnings. All winnings (including W2G's in my name) are mine ... Would I report these winnings as income under my own return or would I split them 50/50 between my return and my wife's? I've read an IRS publication about community property/income but cannot find a specific reference to gambling winnings. Since I live in California, not sure if these winnings are considered community income. Thank you!

[VolvoGirl]

Larger refund?  That would be very usual.  Sometimes people don't realize the differences between filing  Joint and MFS.

 Here's some things to consider about filing separately……

In the first place you each have to file a separate return, so that's two returns.  And if you are using the Online version that means using 2 accounts and paying the fees twice.  

Many people think they come out better when filing Married Filing Separate but they are probably doing it wrong.  If one person itemizes deductions on Schedule A then the other one must itemize too, even if it's less than the standard deduction, even if it is ZERO!  And if you are in a Community Property state it can be complicated to figure out.

And there are several credits you can't take when filing separately, like the

EITC Earned Income Tax Credit

Child Care Credit

Educational Deductions and Credits

And contributions to IRA and ROTH IRA are limited when you file MFS.

Also if you file Married Filing Separately up to 85`% of your Social Security becomes taxable right away even with zero other income.

See …….

https://ttlc.intuit.com/community/married/help/is-it-better-for-a-married-couple-to-file-jointly-or-...

[able88]

Thank you, VolvoGirl! Unusual, indeed. If we file separately, my wife would we able to claim a $7500 EV tax credit whereas filing jointly we would not qualify. 

In preparing returns in both scenarios on Turbo Tax for comparison purposes, I am itemizing deductions.

None of the 3 situations that you reference apply to us (EITC, Education, Childcare credits), IRA deductions, SS income.

So still looking to see how to treat gambling income in filing separately in CA.

Thanks.

[AmyC · Accepted solution]

Lottery, gambling, game show, all of it is considered community property in CA and must be divided when it happened while married.

Related: Married/RDP filing separately | FTB.ca.gov