How do I report community property on TurboTax?

Sign in to TurboTax and open or continue your return. Search for community property and select the Jump to link. On the Community Property Income screen, select Yes and follow the instructions to enter any income adjustments.

How do I calculate community property income adjustments?

Combine your total separate income and one-half of your total community income to calculate your gross income for the year. Record this total on the top of Internal Revenue Service Form 1040 to start your tax return. This finishes the income adjustment for community property. Complete your tax return as normal.

How is community property tax calculated?

When you live in a community property state and file separate returns, you each must report 50 percent of your spouse’s income and half of income generated by community assets, plus all of your separate income. The IRS has an allocation worksheet to simplify your calculations in Publication 555 Community Property.

How do I report community income on my taxes?

To properly report community income in a married filing separate tax return, you will enter half of the taxpayer’s AND the half of the spouse’s community income items separately, dividing the amounts from each in half. For example, Spouse A and Spouse B are domiciled in a community property state.

What happens if I don’t file Form 8958?

The form the taxpayers should use is IRS Form 8958. This form allocates the income, deductions, credits and withholding to each taxpayer in accordance with community property law. Failure to use IRS Form 8958 may trigger many months of endless correspondence with the IRS Service Center.

Can I file my taxes separately if married?

Married couples have the option to file jointly or separately on their federal income tax returns. The IRS strongly encourages most couples to file joint tax returns by extending several tax breaks to those who file together.

Where to find community property worksheet on TurboTax?

The worksheet shows how the income on this tax return compares with the other taxpayer’s return. Your community property worksheet will appear right after you complete your income adjustments. Sign in to TurboTax and open or continue your return. Search for community property worksheet and select the Jump to link.

How to file a community property tax return?

First, use your community property state rules to determine what adjustments you expect to enter in TurboTax. Often one return has an addition to income and withholding, while the other will have a reduction (subtraction) to income and withholding. Sign in to TurboTax and select Take me to my return .

What to put on community property tax form 8958?

Attach your Form 8958 to your separate return showing how you figured the income, deductions, and federal income tax withheld that each of you reported. Form 8958 is used for married spouses in community property states who choose to file married filing separately.

How does community property laws affect your taxes?

Community property laws generally. Community property laws affect how you figure your income on your federal income tax return if you are married, live in a community property state or country, and file separate returns. If you are married, your tax usually will be less if you file married filing jointly than if you file married filing separately.