Welcome back! Ask questions, get answers, and join our large community of tax professionals.
cancel
Showing results for 
Search instead for 
Did you mean: 

How to allocate unemployment income in a community property state

Kathleen1
Level 4

Is there an easy way in Lacerte to allocate unemployment income between spouses in a community property state to get the maximum $20,400 exclusion even if one spouses UI is under $10,000 or only one spouse has UI?

0 Cheers

This discussion has been locked. No new contributions can be made. You may start a new discussion here

27 Comments 27
sjrcpa
Level 15

Specifically CA? Since I don't think any of the other community property states have opined on this treatment.

The more I know, the more I don't know.
0 Cheers
abctax55
Level 15

In a different forum ...  there's a long discussion about this; basically says there ISN'T an easy way to do so in Lacerte, for CA purposes.

I have one to *play* with one this weekend that has the same scenario.  I'll try to remember to report back if/when I figure anything out.  And you, please do the same?

HumanKind... Be Both
qbteachmt
Level 15

You can read the prior similar topic here:

https://proconnect.intuit.com/community/lacerte-tax-discussions/discussion/how-do-i-get-lacerte-to-e...

 

*******************************
Don't yell at us; we're volunteers
0 Cheers
amec
Level 4

Calhoun v. Commissioner (1992) 64 TC 222 establishes that UI is community property in CA. 

I've seen a post on another board that indicated that Lacerte is working on updating for this split.

 

Kathleen1
Level 4

That would be awesome.  I tried unsuccessfully to fake out the software.

0 Cheers
hgtc
Level 5

It looks that Lacerte has fixed this UI split for MFS yesterday.

0 Cheers
Kathleen1
Level 4

Are you referring to splitting the income on MFS returns, or splitting the income on a MFJ return?  And how could you tell that they fixed it?

0 Cheers
Kathleen1
Level 4

I do see that on the MFS comparison they have split it and excluded it.  But I don't see how on a MFJ return to allocate the unemployment between spouses.

0 Cheers
hgtc
Level 5

It show split UI in both MFS returns (for CA taxpayers).

0 Cheers
Kathleen1
Level 4

I see that, thanks.  But for those who don't need to file MFS, but still need to allocate the unemployment between spouses in order to get the full $20,400 excluded, I don't see how there has been anything added to do that.

Kathleen1
Level 4

Does anyone know if Lacerte has fixed this so that unemployment income can be allocated between spouses when filing a joint return to get the full $10,200 exclusion for each spouse when only one spouse has unemployment income?

amec
Level 4

Yes, the have fixed this, at least for CA residents. But they have to file MFS, not MFJ.

0 Cheers
Kathleen1
Level 4

So you can't get the exclusion for both on a joint return, or they just haven't programmed it yet?

amec
Level 4

You cannot get the exclusion of $10,200 for each spouse when only one has unemployment income on a joint return.

0 Cheers
Kathleen1
Level 4

Is there any tax citation you can refer me to?  I haven't been able to find anything in regards to that.

0 Cheers
amec
Level 4

I should qualify my prior comment, it has to be MFS if the MFJ AGI is over $150K.  I'm still hunting for an answer under $150K.

 

0 Cheers
Kathleen1
Level 4

Thanks.  That is my issue, the ones under $150K MFJ

Karen A
Level 2

Spidell came out with a notice about this.  The unemployment should be split between the two spouses on a MFJ return so each are eligible for the $10.2 (total of $20.4) but I can't get an answer from Lacerte tech about how to do it.  As of a couple of weeks ago this wasn't even on their radar. Sitting on 3 returns waiting for an update or answer.

Kathleen1
Level 4

Yes, I talked to a programmer a week or so ago and he told me they were schedule to come out with an update for this on 4/8, but he emphasized scheduled.  And I have not heard a word about it since.

0 Cheers
Karen A
Level 2

Well, at least they are addressing it.  Hopefully soon!

0 Cheers
Kathleen1
Level 4

Definitely.  Although it would be nice if we had some indication when they hope to have it out.

0 Cheers
Karen A
Level 2

Has anyone heard an update from Lacerte about this?

Karen A
Level 2

Just spoke with them again and....drum roll......they are working on it.

"Hopefully, within the next couple of updates, can't give you a time frame, though."

0 Cheers
George4Tacks
Level 15

I did a split on 4/8 and it worked fine. Unemployment was for spouse. No entry =2 to allocate, as that is reserved for state refunds. Either leave blank for  taxpayer or enter 1 for spouse.

It split everything except pension, so I cheated and created duplicate entries for 1/2 and attached a statement.

BE SURE you have indicated a community property state in Settings

Community Property.JPG


Answers are easy. Questions are hard!
0 Cheers
Kathleen1
Level 4

Thanks for the feedback.  However, it sounds like you are filing MFS returns which both generate the exclusion of $10,200.  We are waiting for an update that will split the unemployment income between spouses on a MFJ return with combined AGI under $150K so that they get the maximum exclusion of $20,400 on the joint return when only one had unemployment income.

Drphibes
Level 7

You have, of course, given your client the option on this as a risk as the semantics of the law could lead to interpret the $10,200 break for only whom the 1099 name is on it, yes?  We are sitting on 12 already filed joint returns waiting to do superseded returns and 28 other yet to file.  Waiting 1 more week and then giving the client the option.

0 Cheers
anglerblue
Level 2

This problem only seems to concern CA returns in which the preparer wants to adopt the position promoted by Spidell that UI can be split between spouses due to community property laws.  Simply make two entries, one for taxpayer and one for spouse, reporting 50% of the total UI for each.  The program will then allow the total MFJ exclusion of up to $20,400,  No program update needed.