Community property state such as California requires income to be adjusted 50:50 for married couples when MFS.
Now in turbo tax, one can adjust the incomes between the spouse/RDP with user input so one can report community property income adjustment as "Positive Community Property Adjust." or "Negative Community Property Adjust." in Schedule 1.
When completing the 8958:
Do we still have to split the each income in 8958 50:50 now that TT introduces the "other income" to adjust the community property differences?
In 8958, with TT's approach, in the line 12, there will be a row named "Other income". The amount will be the community property income adjustment (matching the schedule 1's value) and one spouse is positive and another spouse is negative.
Say in a case: A made 1000, B made 3000
Is this legitimate that we report:
8958 for A and B:
line 1 Wage
W2 - A:1000
W2 - B: 3000
line 12 Other items
Other income: A: 1000, B: -1000
(So total income of A and B each is still 2000)
Or we have to report:
8958 for A and B:
line 1 Wage
W2 - A:500 - B:500
W2 - A:1500 - B:1500
line 12 Other items
Other income: A: 0, B: 0
(In this case the other income is 0, which does not match A or B's individual filing of "SCHEDULE 1, Additional Income and Adjustments to Income" as TT adjust the community property income with line z, as Positive / Negative Community Property Adjust)?
Also for the adjustment, should the deductions and credits be considered as well? Is it a pure 50:50 split over the income or the 50:50 split over the income after the deductions and credits (So the taxable income between the couple is evenly the same?)
