Start by checking California rules for community property. In Texas community property is the default status and the only way around it is a separate property agreement signed by both spouses either before or after marriage setting forth the property that is specifically designated as separate. This becomes important in married filing separate and divorce and death situations. If they have made no arrangements for property to be designated as separate it is community property in Texas. Community property for income tax includes everything that is received during the marriage: wages, interest, dividends, rents, royalties, K-1 flow through income, everything that ends up on  form 1040 is community property income by default. The entire income of the two spouses will be taxed according to current tax law so the filing status choice serves as a way to limit liability for tax not the amount of tax due. With joint status either spouse can be required to pay the entire tax due. With married separate one half of every item (income and deduction) on what would be the joint return is reported by each spouse without regard to who earned it. The only exception are those items that cannot be claimed at all when using married separate. The result is each spouse normally is liable for one half the total tax due and is only liable for his/her half of the tax due. Of course the subject being tax you can surely find exceptions to what I am writing here (review carefully the guidance concerning the taxpayer and spouse indicators for additional specifics) but the general concept is one of limiting liability and reporting each person’s respective share of community property income. The form that allocates the items of income and deduction between the spouses is included with each married separate return to acknowledge the total amounts reported to IRS under the respective taxpayer id numbers and then show the total is allocated to the two spouses. It is essentially a completeness check.