How is "Other Income" on Community Property - Other Misc. Items figured? What is the formula? It says it was "pulled from your return" but I don't know from where?

[daviduskovich]

We are filing married but separate and on Other Income it is showing 10,200 different than what is expected (and in the income adjustments).  What is used to derive that "pulled" number.

[BillM223]

$10,200 is exactly the amount of unemployment income that has recently been made nontaxable by the American Rescue Plan Act. This has very recently been implemented into the federal return in TurboTax, and it would not be shocking if this causes some unusual situations, like being excluded as income but not being excluded for married filing separate.

Take a look, and if this seems to be the case, come back and tell us the details.

[daviduskovich]

Thank you!  I JUST read about that as well and that HAS to be the reason.  What I don't understand is how to apply that to both of us.  In years past, I make sure we, at the end of this complicated community property tax filing road, have the same income.  Do I just allow my spouse's income and my own to be 10,200 different? 

[BillM223]

Does it appear that the $10,200 is being reported as income? If you were filing as Married Joint, I think that this amount would have removed from line 7 on Schedule 1 (1040) - that is, if your unemployment was $15,000, then the amount on line 7 would be $4,800.

However, to be honest, I don't know how TurboTax implemented this - they may have entered a -$10,200 adjustment on line 8 of Schedule 1 (1040).

If you add up on your fingers and find that the aggregate of the income for the both of you is $10,200 more than it really should be, you need to make an adjustment for the spouse who has this $10,200 as an income item, to remove this amount from that spouses income. 

If you need to add a description, be sure to indicate that this is an adjustment because of how the software is handling the change to the taxation of unemployment compensation.

[daviduskovich]

Turbotax is not subtracting the 10,200 from the "total income" view at entry, it's only happening behind the scenes on the worksheet. 

1. I manually deducted the 10,200 from our total income calculations

2. Then manually entered the 10,200 on both of our Other Misc worksheet

I am finally able to get to "same income" for both of us.  

Now I am worried that I should instead just report one of incomes being 10,200 higher and let the behind the scenes calculation work. 

What seems most prudent?

[ThomasM125]

You should just enter the unemployment income as you normally would, as a form 1099-G entry. TurboTax will automatically make an adjustment to "Other Income" to deduct the non-taxable portion of the unemployment benefits.