MFS community prop state------

[taxman36]

Have a client that needs to file MFS and I am trying to figure this out. They live in a community prop state in my stware which is Drake it is asking for a MFS allocations form. Does anyone have any experience with this and how this form is to be filled out.

I had always thought that in a community prop state you are taxed on half of the income no matter what but when I do the split in the system it is not splitting the income just the deductions and interest.

Any help would be great I looked up the pub 555 and still am unclear.

Thanks in advance

[Roland Slugg]

Yes. All income that is community income is allocated 50-50 to each return, i.e. the H's and the W's. Income from separately owned assets is allocated only to the owner's return, and none to the other spouse's return.

[taxea]

Have a client that needs to file MFS and I am trying to figure this out. They live in a community prop state in my stware which is Drake it is asking for a MFS allocations form. Does anyone have any experience with this and how this form is to be filled out.

I had always thought that in a community prop state you are taxed on half of the income no matter what but when I do the split in the system it is not splitting the income just the deductions and interest.

Any help would be great I looked up the pub 555 and still am unclear.

Thanks in advance

if it isn't in the program check the state website.

[travis bickle]

You are correct, but ...

Yes. All income that is community income is allocated 50-50 to each return, i.e. the H's and the W's. Income from separately owned assets is allocated only to the owner's return, and none to the other spouse's return.

the problem is to define "community income" properly, since there are Texas rules and California rules.

The following comes from this site -

http://communityproperty.uslegal.com/laws-governing-community-property/

In Texas, marital property can be either separate property or community property. Under the Texas Constitution, community property is the property acquired by either spouse during the marriage and property possessed by either spouse during or on dissolution of marriage is deemed to be community property. In re Martin, 2009 Bankr. LEXIS 1722 (Bankr. N.D. Tex. 2009), the court ruled that community property can be divided into two sub-types: solely managed and jointly managed. In Texas, property is solely managed community property if it is property that the spouse would have owned if single, including: (1) personal earnings; (2) revenue from separate property; (3) recoveries for personal injuries; and (4) the increase and mutations of, and the revenue from, all property subject to the spouse’s sole management, control, and disposition.
(emphasis added)

and

The law of the place of domicile of the acquiring spouse at the time of the acquisition governs the determination of whether the acquired property is separate or community property. In Falk v. Falk, 2008 U.S. Dist. LEXIS 111181 (N.D. Cal. Nov. 5, 2008), the court stated that marital property in California is governed by Cal. Fam. Code § 760 which provides, except as otherwise provided by statute, all property, real or personal, wherever situated, acquired by a married person during the marriage while domiciled in this state is community property. California law governs the determination whether marital property is community property or separate property.

IANAL, but it seems to me that according to the information above, wages in Texas can be considered separate property but not so in California.

The state rules are definite factors to be acknowledged when preparing an MFS return. I do not believe it is correct to simply state "50-50".