Information about Form 8958 in a Community Property State

[IdahoanTaxPayer]

Hello:

I recently got married a few months ago at the beginning of September, we both lived in Idaho (a community property state) . My questions are as follows:
1. Do we (my wife and I) have to bother with filing form 8958 when doing our 2020 if we were only married for the last 3rd of the year?
2. If the answer to the above question is yes, We would both like to file our taxes separately so when completing form 8958 do we HAVE to split everything in half (income, withholdings, etc.) or can we just fill in the form but allocate all of my wife's income and withholdings to her and vice versa?
3. If we are not able to allocate each of our income and withholdings accordingly and we have to split everything in half then why have the option to file married but separately? why not make it so that folks just file jointly if everything will still come out to half?

Thank-you

[MarilynG1]

If you were married on 12/31/2020, you are considered married for the whole year and can file as Married Filing Jointly. 

You are correct that if Married Filing Separately you would normally each report only your income/taxes paid on your individual returns. 

When you live in a community property state and file separate returns, you each must report 50 percent of your spouse's income and half of income generated by community assets, plus all of your separate income.

Click this link for more info on Filing Separately in a Community Property State.

You may want to test both joint and separate filings to see which one benefits you the most. 

[IdahoanTaxPayer]

MarilynG1, thank-you for your reply. I have a couple of follow-up questions in regards to filing separately.

1. Since we got married in September does this mean that I would have to claim 100% of all W2 income & withholdings prior to that date and then only half from the marriage date until the end of the year plus the half from my wife's income and withholdings from that date as well? or does it matter and can we just assume that we were married the whole year? 

2. I am using the turbotax online software to do this. Does this mean that I would have to create another W2 entry for my wife's job(s) and only enter in half of her income and withholdings and change my own W2 to only include half of the income and withholdings actually shown in the W2 as well and just display the actual figures in the 8958 form?

3. In December I sold some stock and got a 1099-B from my brokerage account. Does that mean that she we both also have to claim half of those proceeds although I purchased those stocks years ago? (they have obviously appreciated some since September, when we got married, till the end of the year)

Thank-you for your help!

[MarilynG1]

No, don't 'create a W-2' (the IRS has copies of all W-2's).

You are considered as 'married all year' and the income will be calculated based on that.

[IdahoanTaxPayer]

Thank-you!