Married - one spouse lives in CA (community property state) and the other in HI (not a community property state), solar installation in HI

[Kathy_and_Dan]

My husband and I are retired with our income consisting of social security and dividends from investments.  I currently live in California which is a community property state.  My husband has lived the entire 2021 year in Hawaii which is not a community property state.  We own homes in both states.  Adding to the complexity of our tax situation, we installed solar panels on the house in Hawaii and want to take advantage of both the federal and Hawaii energy tax credits. 

1)   I'm assuming the state credit for the solar installation would go only on the Hawaii income tax forms.  When I tried to set up a MFJ federal return, TurboTax said that it does not "support the situation for a married couple where each person lives in a separate home."  So, does this mean we must file our taxes as married filing separately?

2)   I understand there's no need to split the income if we file our federal taxes as MFJ.  If we must file MFS because of the solar installation, can we simply assign the income for our various joint accounts solely to the person whose social security is on the various 1099s (we would have no problem with that) or must we split everything because one of the states is a community property state?  If so, what would be the process?

Thanks in advance.

[RobertB4444]

@Kathy_and_Dan  Your situation is fun but not completely unique.  So here is what you do.  You're going to file jointly for your federal return.  Pick an address to be your primary address with the feds and use it on the return.  

Then you'll need to create a second return for the two of you - we call it a mock return - for married-filing-separately.  Because of California you will have to split the itemized deductions as well.  You will then file separately for each state and then each of you only have to pay resident taxes in the state that you're in.

You can only take the energy credit in Hawaii.

[Kathy_and_Dan]

Thanks, Robert.

I have a few more questions:

(1)  Do I file the mock federal returns with the two states or the joint one? eFile all returns or just the Federal one?

(2)  Some of the 1099s have my social security number, some have his.  Do I need to adjust the amounts in Turbo Tax to do the nominal thing to the other person?

(3) Does adjusting the amounts as asked about in question 2 automatically generate a Form 8958 (Allocation of Tax Amounts between Certain Individuals in Community Property States) or do I need to create that myself manually?

Thanks, Kathy

[Kathy_and_Dan]

Hopefully my last question...

You said we can "only take the energy credit in Hawaii".  I understand that it wouldn't be allowed in California since the solar installation wasn't there but are you saying we cannot take the Federal energy credit because we live in two different states?

[RobertB4444]

1-The married filing joint return will accompany the state returns - both of them

2-You will efile the federal joint return and then you will mail both state returns with the joint federal to accompany it.

3-It should automatically generate form 8958 for you

Bonus-You definitely want the energy credit for federal.  I just meant you don't get it in California