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Married Filing Separately in community property states

by TurboTax•165• Updated 2 weeks ago

Filing taxes in community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin) as Married Filing Separately (MFS) can be complicated.

Certain states have laws about community property defining how they expect MFS couples to share, or allocate, income. 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.

If you're using TurboTax Online, we recommend that you transfer your return to the TurboTax Desktop version. You'll save time by entering less information.

Begin by completing a MFS federal tax return for you and your spouse, as you'll need the amounts for different income categories, tax amounts, and all tax payments for each of you. If one of you plans to itemize deductions, the other person must itemize as well. Otherwise, you'll both have to use the Standard Deduction.

You may not be able to e-file, in which case TurboTax will guide you through the steps to print and mail your return.

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.

  1. Open or continue your return.
  2. Navigate to the community property section:
    • TurboTax Online/Mobile: Go to community property.
    • TurboTax Desktop: Search for community property and select the Jump to link.
  3. On the Community Property Income screen, select Yes and follow the instructions to enter any income adjustments.

After you've told us your income adjustments, you'll have to fill out the community property worksheet. The worksheet shows how the income on this tax return compares with the other taxpayer's return.

Your community property worksheet will appear right after you complete your income adjustments.

If you can't find the worksheet:

  1. Open or continue your return.
  2. Navigate to the community property section:
    • TurboTax Online/Mobile: Go to community property.
    • TurboTax Desktop: Search for community property and select the Jump to link.

We’ve added clear instructions directly on the worksheet to guide you through filling it out correctly.

Once you've determined how to split both your combined income and tax withholding between you and your spouse, continue with your state tax return.

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.

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, print the tax return with the community property worksheet and mail the return to the IRS.

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