My spouse and I are married, filing separately, with joint bank accounts

[user987385]

My spouse and I are married, filing separately, and no dependents. We live in California (Community property state). We have 3 accounts with 1099 INTs. How do we split reporting 1099 INT? Can I file two (2) interest 1099s on my return and my spouse reports one? 

[DawnC0 · Accepted solution]

Dividends, interest, and rents from community property are community income and must be evenly split.  You both should report half of each 1099-INT.  IRS Publication 555 Community Property

Depending on how complex your overall tax situation is, you may want to read this article regarding filing separately in community property states.  Married filing separately in community property states.

[user987385]

What about W2 income.  My spouse and I both have separate W-2 incomes.  Do those W-2s must be evenly split too? or I report it on my own separate tax and my spouse report it on his/her tax?  Thank you

[DawnC0]

Yes, wages and salaries (earned in CA) are considered community income and must be split.  

[user987385]

One last question - Does Turbo Tax takes care of the splitting W-2 incomes, dividends or interests automatically when I file Married separate?  Thank you!!

[DawnC0]

TurboTax has allocation screens and a worksheet to assist you in entering any adjustments your community property state may require when filing separately.   For instructions, see this link.  

[DawnC0]

If you want to compare MFS and MFJ returns, see this document.  

Related Information:

• How can we compare married filing jointly with married filing separately?
• How do I switch from filing jointly to filing separately?

[VolvoGirl]

May I ask Why do you want to file separately?  
Joint is usually better.  Joint has the lowest tax rates and the highest Standard Deduction.   And if you are in a Community Property state MFS gets tricky to figure out.  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 then the other one must itemize too, even if it's less than the standard deduction, even if it is ZERO!  

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/questions/1894449-married-filing-jointly-vs-married-filing-separately

[user987385]

I was thinking of filing separate this year because my spouse's salary is 10K/year lower than my salary, we have no dependents and can not take any credits (EITC Earned Income Tax Credit, Child Care Credit,
Educational Deductions and Credits).  I thought filing separate would reduce some of our taxes.

[user987385]

I was thinking of filing separate this year because my spouse's salary is 10K/year lower than my salary, we have no dependents and can not take any credits (EITC Earned Income Tax Credit, Child Care Credit,
Educational Deductions and Credits).  I thought filing separate would reduce some of our taxes.

[VolvoGirl]

No, filing MFS usually makes you owe more.

[MikeCville]

But what's the rule in non-community property states.  We have an investment that generates dividends.  The investment funds came from the sale of a jointly owned property.

[RobertB4444]

In a non-community property state each of you puts the income that came to you on your own return.  If there is joint income it is put half on each return.  If one of you itemizes deductions then the other must as well.  

But whether you are in a community property state or not filing separately is almost always a worse deal than joint.  You should try it both ways to be certain.

@MikeCville