Community Property Question

[Kram BergGold]

My client is married. He and spouse are CA residents. He is self employed. Gross income is $40,000. Deductions are $500 from pre marriage depreciation. $1,000 from pre marriage inventory. $14,500 post marraige expenses. Igf they choose to file MFS do I give them each $20,000 of icome and $7,250 of expenses and then my client the other $1500 of expenses or just split the net 50-50 resulting in $14,000 each?

[Gary]

Pre-marriage

I would give the $1500 to the pre marriage expenses.

How do you split up wages? Do you use a substitute W-2 with an explanation? I have always talked clients out of filing MFS.

[Maribeth]

My client is married. He and spouse are CA residents. He is self employed. Gross income is $40,000. Deductions are $500 from pre marriage depreciation. $1,000 from pre marriage inventory. $14,500 post marraige expenses. Igf they choose to file MFS do I give them each $20,000 of icome and $7,250 of expenses and then my client the other $1500 of expenses or just split the net 50-50 resulting in $14,000 each?

You will also need to split the income into its two components: pre and post marriage. Then apply the appropriate expenses to the split income. She will not pay any SE tax on her share of the self-employment income; he will have to pay all of the SE tax on both pre and post marriage SE income.

Maribeth