Regarding married filing separately, do you enter half of the combined total community property wages on the w2 section of the 1040 or only enter your own wages on 1040?

[DaveF1006]

Deductions must be split 50/50 as well as income.

[nataliacanada]

What about business income, from one business that one of the domestic partners has? Is this also split

[BARRacine]

If it's considered community property income, then yes.  I had 2 small home businesses.  The CPA I used for several years that was experienced with domestic partnership in my state (WA) said it was community income. She did report the business income and expenses on each of our returns, split 50/50. I still get a little residual royalty income from those businesses, I do our own taxes, and that's how I have continued to report it, split 50/50.  I don't know if it matters depending on the state, or if that is true for all states.  Hope this helps.

[nataliacanada]

Thank you.

If both partners have a business each, and one business has a profit but one has a loss, can the profit and loss be combined together?

[BARRacine]

No, each business has a schedule 1. You will each have a schedule 1 for a business with a loss and one with a profit.

[nataliacanada]

What about if one is a rental that's losing money? 

Partner 1: 

* Wages

* Rental losing money

Partner 2

* Business making money

Does the net rental loss get shared across two? Based on the publications it seems like it would?

[PatriciaV]

Yes, according to the IRS rules in Pub 555 Community Property, net profits from a sole proprietorship are community income and must be evenly split. Once the business activity is equally distributed to each partner, the net gain or loss combines to be included in taxable income.

@nataliacanada