Reporting divorced person's W-2 info in a community property state on tax software

[billfuss]

I have a client who was divorced on October 1, 2013 in Wisconsin, a community property state. I know up to that time the couple splits income and withholding 50/50; after that time the taxpayer's income and withholdings are 100% their own. I use TaxAct software to file returns. Let's say up to 10/1/2013 the taxpayer earned 20,000 (so 10,000 allocable to him) and had federal withholdings of 2,000 (1,000 allocable to him). After that time he had 4,000 additional wages and 400 withholding. So his W-2, from his employer, will show wages of 24,000 and withholdings of 2,400; of which 14,000 wages and 1,400 withholdings are allocable to him.

How does one input this into tax software, so that the appropriate allocable amount is being reported? And it does not generate a matching notice?

Thank you,

Bill

[Maribeth]

There should be a community property split worksheet in your tax software. If there isn't, you will have to prepare a worksheet yourself and attach it to the tax return.

You report everything in total on the tax return, i.e, the W-2 amount in full will go on the line 7.

The adjustment to the income then becomes an item on line 21. In your example, the $10,000 of W-2 income allocated to the other spouse would be a deduction on line21.

[billfuss]

What about the withholding tax?

[Maribeth]

For that, you will only take the proper amount to the return. However, you will show the allocation on your worksheet.

[appelman]

Isn't this just like the bad old days...

when same-sex spouses were filing single but reporting community wages and withholding? I split both down the middle and allocated half the wages and withholding to each. Different software may handle it differently. With mine (TaxAct), you generated all W-2's (with allocated wages and withholding) as if they had been issued to the spouse who was filing, regardless of which spouse actually earned the wages. (For the non-earning spouse on a W-2, I showed zero SS and Medicare.) Other adjustment items, such as SE income, will generally require Line 21.