Married in different states (CA, NV), how to file?

[tangerine789]

Married 2021. I’m in CA, made 75k in 2021. Husband in NV made less than 15k, was unemployed for many months. We have W-2’s. Financial statuses uncomplicated (no property ownership, no HSA/401K, etc).

How should we file both federally and state? And will this be the most beneficial for us financially?

I keep seeing something about “community property” in CA and NV, but it goes over my head. What is that all about? 

[Cynthiad66]

You should file your federal return as a joint return.  It is the best option for married couples.  However you should file your State as separate.  

Note: you will not need to file a Nevada state return because there is no State income tax.

Here is how to prepare federal joint and separate states  It is recommended that you use TurboTax Desktop for this process.  However, you can use TurboTax online for the Mock return since you only need one state.

Here is an overview of the process:

1. Prepare one married filing jointly (MFJ) return to file with the IRS.
2. Prepare a mock married filing separate (MFS) return for each taxpayer. This is for your records only, and will be used to generate separate state returns for each person. The mock federal returns are not filed.
3. Then for the first taxpayer, label and use the first mock MFS federal return to prepare their state MFS return. Use only their income and their half of the deductions from the MFJ federal return.
   • This ensures that TurboTax only transfers the first taxpayer's income to their married filing separate state return.
4. File this MFS state return, not the mock federal return that it pulls the information from.
5. For the second taxpayer (spouse), label and use the second "mock" MFS federal return to prepare their state MFS return. Again, use only their income and their half of the deductions from the MFJ federal return.
6. File the second MFS state return, not the second mock federal return that it pulls the information from.

Note:  Step 6 is not needed since you only need to file the California return

[tangerine789]

Thank you for the detailed instructions! However someone just told me this:

“California and Nevada are community property states. California treats half of your income as if your husband earned it instead of you. Similarly, half of your husband's income is treated as if you had earned it. So that means that if you file a joint federal return, you must also file a joint California return since you both had income in California. You would file Form 540NR, even though one of you is a resident.

Your entire salary is taxable in California since you  earned it in California. Since your husband worked in Nevada, half his salary is taxable in California because you are treated as having earned half his salary and you are a California resident.”

I am so confused! Is any of this true and does it apply to me? 

[MayaD]

If you file a joint return for federal purposes, you may file separately for California if either spouse was one of the following:

State of CA franchise Tax board

• An active member of the United States armed forces or any auxiliary military branch during the year
• A nonresident for the entire year and had no income from California sources during the year

[tangerine789]

Sorry I made a mistake pls ignore I’ll reply again later, trying to figure this out! 

[KrisD15]

Yes, we are here when you need us. 

Both Nevada and California are "Community Property States"

 and that means that income from either spouse (after marriage) is income of both spouses. 

Property you each had before marriage is still your own.

For example, if one spouse earns a 70,000 income and the other earns 20,000, together they earned "Community Income" of 90,000. 

If the wife had a rental property before marriage, that property and the rental income it produces is hers alone. Let's say that brings in 24,000.

This does not complicate anything UNLESS the couple wish to file Married Filing Separately. 

When a married couple living in a Community Property State (or married in one) wish to file separately, they do not simply report his income on his return and hers on hers. (Same for same-sex couples in certain states) They need to SPLIT COMMUNITY income, expenses and credits. 

They also need to follow the other Federal requirements, such as each Itemizing or each taking the Standard Deduction. 

So in the example above, if filing separately, they would each claim 45,000 "Community Income" and she would also claim the 24,000 rental income. 

Yours is an interesting situation, I suppose he would need to file for California as a non-resident if he needs to claim Californian income.  

[tangerine789]

So to summarize what I should do:

FEDERAL

- we’ll do married filing jointly

- our “community income” will just be both our incomes added together

- uncomplicated 

STATE

- I will do married filing separately for my California taxes for my own income

- he will not need to file state as he’s always been in NV and only earning in NV 

is this correct? 

[DaveF1006]

 Yes, this is correct. Use the procedure that Cynthiad66 outlined above. 

1. Prepare your joint return first. When it is time to file, indicate you wish for your federal return to be efiled but indicate you will mail your state return in. Of course, you re not going to mail in the state return. Turbo Tax will give you these options when you file your return.
2. Now the second return will be YOUR married filing separate return. In the federal return, you will indicate you are filing the return separately from your husband. 
3. Since you are filing in the state of California, Turbo Tax will open up a Community Property Income dialogue screen in your federal return. It will ask if you need to make adjustments to your community property income, you will say yes.
4. Don't report anything in the first two screens, the third screen is where you will report your Community Property - Wages Here you will allocate your wages and your husbands wages 50/50. Each income will be reported separately according to employer. Do that for each of the income screens that follow using the 50/50 allocation.
5. Then continue reporting your income as well as your husband's. In the end, the totals will be populated into your California return as well.
6. After the return is done, you will indicate that you wish the mail the federal return but you wish to efile the California state Return when that option is available. Again, you will not mail your federal return.
7. Now your husband will need to prepare his California state non-resident return in the same manner since California is a community property state and there is  income allocated to him even if he likes it or not.
8. Note, if you itemize your husband will need to itemize also.  This may or may not create a taxable situation for him in his California return.
9. Also note that if you prepare these in Turbo Tax online, you will need to pay for three separate returns. If you purchase the software product, you will be able to prepare these three returns in the same product. 
10. If you purchase the software product purchase it here because if you purchase a CD product from a retailer, it may not be that reliable because some of these products don't update properly.
11. Hope this helps.

@tangerine789

[ Edited 03/11/22|07:06 PM PST]

[filer12345]

DaveF1006 This is very very helpful. I have a similar situation, but my wife is in FL and earned FL income (lives with our kids) and I am in CA in a rental on my own and travel back and forth (but earned CA income working in CA and was more than 183 days in CA). 

For federal it is easy, we do jointly and e-file

For CA, what should I do? Should I do jointly (the system asks me what amount of our combined W2 was in CA) or should I do separate? If separate, do I need to file alone or she needs to file too? We are allowed to do separate because she was a non resident all year. 

[AmyC]

Actually, according to Filing status | FTB.ca.gov you should use the same status as federal. CA should only tax CA income so be sure to remove the FL income.

@filer12345