Tip: If you're using TurboTax Online, we recommend that you transfer your return to the TurboTax CD/Desktop version. You will save time by entering less information.
Married Filing Separately in Community Property States
Filing taxes in community property states as married filing separately (MFS) often has some extra work for you. Certain states have laws about community property defining how they expect couples to share, or allocate, income between the two persons if they are not filing as married filing jointly (MFJ).
Community property states are: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.
TurboTax has allocation screens and a worksheet to assist you in entering any adjustments your community property state may require when filing separately. For more information, refer to IRS Publication 555 Community Property.
Begin by completing a MFS federal tax return for both persons as you'll need the amounts for different income categories, tax amounts, and all tax payments for each person. Remember, if one of you itemizes deductions both of you must itemize, or both must use the standard deduction.
Note: You may not be able to e-file, in which case TurboTax will guide you through the steps to file a paper return.
Entering income adjustments for a community property state
First, use your community property state rules to determine what adjustments you expect to enter in TurboTax. Often one return has an addition to income and withholding, while the other will have a reduction (subtraction) to income and withholding.
- In TurboTax, select Federal Taxes, then Other Tax Situations, then click the Done With Other button.
- On the Community Property Income Adjustments screen, check Yes and click Continue.
- Enter the adjustment amount in one of the fields:
- Enter any additional income for this return in the Community Property Addition Adjustment field.
- Enter any income reduction for this return in the Community Property Subtraction Adjustment field.
- When done, click Continue.
- On the Tax withholding Adjustments screen, enter the adjustment amount (if any) in one of the fields:
- Enter any additions for tax withholding or estimated tax payments on this return in the Tax Withholding - Addition Adjustment field.
- Enter any reductions for tax withholding or estimated tax payments on this return in the Tax Withholding - Subtraction Adjustment field.
- When done with your entries, click Continue, save your return, and continue with the next section below.
Complete the community property worksheet
When filing as MFS from a community property state, this worksheet is required and will be included with your federal tax return. The worksheet shows how the income on this tax return compares with the other taxpayer's return.
- Continuing from the steps above, you should see the Community Property - Wages screen (or search for "community property worksheet").
- Your federal taxes should show by Employer in the first column, You in the second column, and your Partner/Spouse in the third column. Total Wages appear in the final column.
- Manually enter the amounts from your partner/spouse’s return in each line of the third column. Then click Continue.
- On the Community Property - Interest screen, check Yes and Continue if your partner/spouse needs to report interest, Enter the payer and who received the interest.
- Repeat on the Community Property - Dividends screen, entering Yes and Continue to enter any dividends your partner/spouse needs to report.
- The next screen, Community Property - Self Employment Incomee is for reporting your partner/spouse's self-employment income in the same manner.
- The next screen, Community Property - Other Miscellaneous Items, is for reporting your partner/spouse's miscellaneous income.
- On the Enter Your Spouse's Community Income screen, fill-in the reporting columns for you and your spouse.
- Select the Calculate Totals button. A third column will show the Totals. The totals should equal your combined income amounts.
Use these columns to see how the allocation appears compared to your state tax rules. Allocation calculations between taxpayers are subject not only to state law, but to individual circumstances. The split is not necessarily 50/50. Refer to our links to your state tax department for your state rules.
You can make changes to the spouse column, then select Recalculate to show the changes. To adjust the amounts in the You column for this return, select the Back button. At the Other Tax Situations screen, select Done With Other. Then make any adjustments, continue to the worksheet and calculate the new totals.
If you make an addition in one tax return, there should be a matching reduction in the other tax return. The Totals column must show the totals for each line and for your total combined income.
Once you have determined how to split both your combined income and tax withholding between you, continue with your state tax return.
Finish your tax returns
Continue entering or checking all other information necessary for both state returns. Be sure to review your federal and state returns for completeness and accuracy when you are finished.
Note: Depending on how tax withholding payments are allocated between the two MFS returns in a community property state, the IRS may not accept e-filed MFS tax returns at this time.
If your tax return is rejected with error code 0103, please print the tax return with the community property worksheet and mail the return to the IRS.