Calif Married Separate Return

[S T]

For a 2007 Tax Return.

I have a taxpayer that separated from his wife in 9/2007, and has completed divorce proceedings.

Due to Calif being a Community Property State, my intent on preparing the Taxpayer (husband's) return was one-half of the taxpayer wages from Jan-Sept 07 (date of legal separation as per divorce papers) and one half of the ex-spouse for the same period, and file the taxpayer as MFS. No itemized deductions thank goodness.

Taxpayer (husband), the attorneys, and the court have asked the ex spouse for her W-2 forms and payroll dates, so we could prepare the proper allocation according to dates. She will not comply and seems like the court is not inclined to pursue.

Taxpayer and myself, do however, have a copy of her form 1040A in our possession, and the best recollection from the taxpayer is that she hardly worked after the date of separation.

Question, could we use 1/2 of the income reported on the ex-spouse's tax return along with 1/2 of the taxpayer's wages to the date of separation in Sept 07, the taxpayers wages from 10/07 to 12/07 on taxpayer's return and then attach a statement to the return along with all of the calculations. I have CFS Worksheets which will accomplish this calcuation.

Do I need to attach the 8275 or 8275R since we do not have the actual date information and reporting only information available, since the other party is non-compliant in furnishing the information to the taxpayer.

Thanks in advance for any insight or suggestions.

Sandy

[taxea]

Calif Married Separate Return

Did they separate in Sept or were they living apart for longer than that?
You may be able to file him single depending on the living circumstances. If not,
what status did the ex use when her return was filed? Did she include half of his income? Her return may have to be amended.
If you do use her 1040A you need to file a substitute W-2 and attach a copy of the 1040A as the source, taxea

[S T]

Separation

Unfortunately the taxpayer's ex-spouse went to a local tax prep office and had her return prepared according to the information that she furnished and received a huge refund including EIC based on improper information.

Taxpayer and ex-spouse separated 9/07 and divorce proceedings after that. Separation date is clearly stated on Divorce papers. Ex-spouse filed as HOH which would not be correct as they were not a married couple living apart for the last 6 months of the tax year. They did live together until the separation date of 9/07. Ex-spouse claimed 2 of 3 children as dependents. The only item that might be considered correct if you ignore the married separate California Community Property rules would be that she claimed her W-2 income.

It would seem that both taxpayer and ex-spouse would need to either file MFS or MJ for 2007 to be correct and that EIC is in question.

Sandy

[JG EA]

I would hope to never use the disclosure form but actually it sounds like a good idea in a case like this. You will be identifying things out in the correct way but there is a point or two where the facts are not clear. That way your client will be safeguarded (and you) because of the wife's wrong return.

PS. Do you use the CFS MFS worksheet? Or do you use your software?

A note. I have also done a return or two where the couple is separated and my client has no infromation about the spouse. No W-2's, financial investment information, anything. I do have them sign something (I very rarely do this) to let them know that the IRS may change their return because it is not done with split income. Maybe if this type of thing comes up again, I'll disclose. It seems like the type of thing that could be a bother later on.

[veritas]

Did you read

the community property section in TTB? Page 14-5,6

Divorcing spouses. Income earned after separation but before a divorce
is final is community income in some states and separate
income in others. Check state law.

Personal expenses. Expenses paid out of separate funds are deductible
by the spouse who pays them. Expenses paid from community
funds are divided equally.
IRAs. Distributions are taxable to the spouse whose name is on the
account. The deduction for IRA contributions for each spouse is
figured separately without regard to community property laws.

Community property laws disregarded:
• Spouses living apart for the entire year (discussed below).
• Spousal agreement. Some states allow spouses to change the status
of property or income by agreement. Check state law.
• Community income treated as separate income. A spouse who treats
an item of income as his or her separate income and does not
notify the other spouse of its nature and amount before the return
due date (including extension) is responsible for reporting
all income on the item.
• Innocent spouse relief. See IRS Pub. 971 for relief from liability
arising from community property law.
General Rules—Property and Income: Community or Separate?

[JG EA]

Thanks for this Veritas. I remember reading about this when I did the taxes. But now forgot. That is my excuse and I'm sticking with it.

[S T]

However

• Community income treated as separate income. A spouse who treats
an item of income as his or her separate income and does not
notify the other spouse of its nature and amount before the return
due date (including extension) is responsible for reporting
all income on the item.

However, taxpayer (my client) does now have knowledge since the ex-spouse return was furnished to taxpayer (my client) via the court. We just don't have the actual earnings by month breakdown, which means income reporting will not be accurate for the time period. And the ex-spouse filed an improper return for filing status and also claiming EIC (which is not really my concern)

I am having an issue with my taxpayer reporting income under Calif regulations as well as Federal regulations under community property and splitting income while still married and living together until 9/07.

Sandy

[joanmcq]

Divorcing spouses. Income earned after separation but before a divorce
is final is community income in some states and separate
income in others. Check state law.

State law in CA is that the community ends when the couple physically separates. But Taxea, there is no way to file single until you are divorced.

[S T]

Thanks

Thank you everyone for the posts! I am working my way through this return.

Joan I totally understand the Ca end of community property scenario and separation dates. The problem is that the ex spouse is not forthcoming with the dates, so I am preparing the return somewhat blindly on splitting community and non community income. There are no deductions, so that is a blessing.

Question, is form 8275 appropriate to file with this return outling the details on how we arrived at the split income, or is form 8275 even needed as long as I attach the computation of split income with notations.

Yes, JG I am using the CFS Income Splitting for community Property Worksheet.

Many thanks,

Sandy

[veritas]

"does now"?

However, taxpayer (my client) does now have knowledge since the
Sandy

Meaning after the due date including extension?

[S T]

After Due and Including Extensions

Yes Veritas,

We had the info at 4/15/08, extensions were filed, and well before the 10/15/08 due date.

It is just the date item on the ex-spouse and how much should be directed to the after separation date of 9/07. That is my only issue on reporting. Taxpayer thinks it might only be a month or two, but the ex-spouse had several jobs, so there is no way of really discerning the proper amount from 9/07 forward, since she won't provide the paychecks or payroll info.

Taxpayer and myself as tax preparer, only have in our possession a copy of her tax return which is for all of 2007., I am allocating 50% of that total reported for approximately 9 months and preparing a married filing separate return for my taxpayer. I don't think we are too far off on the amounts and withholdings. Only dealing with approximately $12,000 total in wages on the ex-spouse.

However, I am concerned about disclosue and calculations for both my taxpayer and myself and understatement of income. Therein the question about filing form 8275 with the return?

Sandy

[veritas]

Apparently

the scenario you have described is common. You have the exact amounts to report from your client's earnings and witholdings.

As to the ex-spouse's earnings most likely you will be over reporting income. My guess is there is little witholding.

Make sure you attach a worksheet showing your computations with the return.

I don't think I would attach a disclosure form.

[S T]

Thanks

Veritas,

Thanks, at least you and JG addressed the discloure form. I have all of the computations, and income proof, just not the actual date breakdowns. Just trying to make sure my client reports as accurately as possible based on the info furnished to us.

So I have to go with what I have and the best that the court could provide us with to file this darned return. We are not talking a lot of income or withholding. Under $20,000 income and under $1,000 in withholding.

Heck the ex-spouse received $4,800 in refund thanks to EIC and improper HOH filing.

I will be glad to get this one filed!

Sandy