MFS and RDP in community property states

[appelman]

This is a strictly technical question on a much rehashed subject. It may already have been addressed somewhere in the forum.

I would like to know how other people handle the technicalities of preparing these returns for e-file. The two software packages with which I am familiar, TaxAct and Drake, create allocation worksheets that are included in the return, but they make no changes in the return itself. The question is how to make the appropriate changes in the return without obtaining either an e-file reject or correspondence from the IRS. Income changes could be dealt with by a "community income adjustment" on line 21, and itemized deductions can be fiddled as necessary. What really puzzles me is how to handle payments,. particularly withholding.

TaxAct's customer service people suggest that you halve the income and withholding numbers in each taxpayer's W-2. They then have you enter the spouse's W-2 on the taxpayer's return, again with income and withholding numbers halved, and with the spouse's name and SSN changed to those of the taxpayer! This last idea positively terrifies me.

I'd be much interested in other people's experience or suggestions.

[kpangelinan]

This is a strictly technical question on a much rehashed subject. It may already have been addressed somewhere in the forum.

I would like to know how other people handle the technicalities of preparing these returns for e-file. The two software packages with which I am familiar, TaxAct and Drake, create allocation worksheets that are included in the return, but they make no changes in the return itself. The question is how to make the appropriate changes in the return without obtaining either an e-file reject or correspondence from the IRS. Income changes could be dealt with by a "community income adjustment" on line 21, and itemized deductions can be fiddled as necessary. What really puzzles me is how to handle payments,. particularly withholding.

TaxAct's customer service people suggest that you halve the income and withholding numbers in each taxpayer's W-2. They then have you enter the spouse's W-2 on the taxpayer's return, again with income and withholding numbers halved, and with the spouse's name and SSN changed to those of the taxpayer! This last idea positively terrifies me.

I'd be much interested in other people's experience or suggestions.

Not sure I understand the situation, but would stay away from changing the numbers on the W2's.

[jimenright]

I live in a community property state

and have always been able to talk my clients out of filing seperately. The community property requirements are to tough to deal with.

[kpangelinan]

and have always been able to talk my clients out of filing seperately. The community property requirements are to tough to deal with.

Good point.....I do the same thing.....file joint if possible.

[appelman]

Alas, not an option for RDP's!

California RDP's can't (yet) file joint on the federal return.

[joanmcq]

I'm in the middle of my first RDP return of the year. I think I may use 'other withholding' or 'other payments' for the partner who is getting extra. I may do a negative entry for the partner getting less, but I'm not sure if that will efile. May just have to adjust the W-2.

[Jesse]

What is RDP?

[Gary2]

What is RDP?

Registered domestic partners.

[Jesse]

Thanks -

Community property is difficult enough, but I must say I'm glad I'm in Wisconsin and not California!

[Jesse]

Another question related

In the year of divorce when couples split the income/deductions up to the date of divorce can this be efiled?

[Questionguy101]

I think the California law is that

if a couple has been separated from each other since the beginning of the tax year and it is unlikely that there is a reconciliation in the near future, each of them can report their own income in their own separate return. That's my understanding after repeatedly reading the rules. Please correct me if I am wrong.

[DaveinTexas]

I've only filed one and by paper.

This is a strictly technical question on a much rehashed subject. It may already have been addressed somewhere in the forum.

I would like to know how other people handle the technicalities of preparing these returns for e-file. The two software packages with which I am familiar, TaxAct and Drake, create allocation worksheets that are included in the return, but they make no changes in the return itself. The question is how to make the appropriate changes in the return without obtaining either an e-file reject or correspondence from the IRS. Income changes could be dealt with by a "community income adjustment" on line 21, and itemized deductions can be fiddled as necessary. What really puzzles me is how to handle payments,. particularly withholding.

TaxAct's customer service people suggest that you halve the income and withholding numbers in each taxpayer's W-2. They then have you enter the spouse's W-2 on the taxpayer's return, again with income and withholding numbers halved, and with the spouse's name and SSN changed to those of the taxpayer! This last idea positively terrifies me.

I'd be much interested in other people's experience or suggestions.

I have only filed one of these MFS returns for a client and I am also in a community property state. I also urge the clients to file jointly if they are on speaking terms. However if they live apart for the entire year then I file the return reporting only one spouse's income; that is how I understand the rules.

The return I filed had adjustments to income on the return (decreases to wages on line 21 to show the amount reported on the spouse's return and increases to withholding in the payment section of the return on page 2 for withholding from the other spouse.) In my case one spouse's income was much greater than the other. I had so many funny adjustments and allocations along with a worksheet I gave up on filing electronically. I mailed in the return with the Drake allocation worksheet and a letter of explanation. I wish I knew of a simpler approach too.

I have a curious question for you. If RDPs are not recognized by Federal law as a married couple can they not each file a Single return?

We don't have RDPs in Texas so I am not familiar with the laws.

[Gary2]

I have a curious question for you. If RDPs are not recognized by Federal law as a married couple can they not each file a Single return?

Not only can they, but usually they must - unless HoH or QW applies.

But state law still governs who owns what, and the IRS has concluded that if the state applies community property rules to a couple, then they must split their income accordingly, even if they're filing with a federal status of Single.

[joanmcq]

Questionguy, in CA, once the couple separates, with no intent of reconcilliation, the community ends. So you don't have to live apart the full year, but would have to split income during the portion you do live together.