Residential Clean Energy and Previously Owned Clean vehicle credits when married filing separately

[Cerband]

How can I split the Residential Clean Energy credit (form 5695) and Previously Owned Clean Vehicle credit (form 8936) between spouses when married filing separately in a community property state (and living together)?

Before making those purchases last year, I met with a tax advisor who said each spouse should claim half of each credit.

We made the purchases with community assets, and we each meet the MAGI requirement for the Clean Vehicle credit based on our 2022 returns (also MFS)

I'm using the TurboTax "community property worksheet" to allocate income (W-2, dividends, and interest) and withholding (W-2), but I don't see a way to allocate credits.

Should I enter it in the Community Property Worksheet under "Other Miscellaneous Items" (which might appear under section 12 of form 8936), and/or manually override the credit amounts on form 1040 sch. 3?

[MarilynG1]

Yes, you could manually override the credit amounts on Schedule 3, but you definitely would need to mail your returns, and include Form 8275 with an explanation.

Since these credits are calculated on a form, and that form relates to a taxpayer's SSN, the program is not set up to split the amounts between two taxpayers.  Perhaps the tax advisor you consulted previously has a better way. 

You might consider one of you taking the energy credit and the other the clean vehicle credit so that there's less confusion/explanation required. 

The Community Property Worksheet is not part of your tax return, and is just for your use.  Since credits can be split as you agree, they are not on the worksheet. 

[Cerband]

Thanks for the quick response!

I will definitely mail the returns (vs. e-file). Last year I found this was already required due to adjusting W2 withholding as community property.

I looked at that form 8275, and not sure how I'd use it for this situation.

You mentioned the Community Property Worksheet isn't part of the tax return, though it seems some details from that go onto form 8958 "Allocation of Tax Amounts Between Certain Individuals in Community Property States", which attaches to form 1040.

That form 8958 has a section 12 for "Other items such as: Social Security Benefits, Unemployment Compensation, Deductions, Credits, etc."

What do you think about listing and allocating the credits in that 8958 section 12?

Thanks again!

[CatinaT1]

Were you able to resolve your issue here or are you still needing guidance? 

Make sure you have ran all updates. 

If using TurboTax Online: Clear your cache and cookies. See this FAQ, for your particular browser.

If using TurboTax Desktop: Please see this FAQ.

If you still are not able to solve this, please call TurboTax Customer service.  Here is a link:  Turbo Tax Customer Service 

[Cerband]

Hello @CatinaT1 

I'm still looking for guidance:

1. Is it appropriate to list and allocate the Residential Clean Energy and Previously Owned Clean Vehicle credits between MFS spouses on form 8958 section 12 (e.g. each spouse claiming half of each credit)?

2. If not, how would I enter this on the form 8275 that @MarilynG1  mentioned?

Thanks.

[MarilynG1]

Here's Form 8275 and Instructions.

You could download and prepare the form yourself and include it with your mailed return to explain splitting the credits the way you want to on MFS returns.

However, including the community property form 8958 may be sufficient, since you are married.

Here's more info on Using Form 8958 and Form 8575. 

@Cerband