Community Property - MFS - Nonres return for non-Community Property State

Forum|Forum|4 years ago
March 2, 2022
1 reply
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I have a married couple domiciled in NM filing separately. One spouse has some of her wages sourced to CO. Since CO works off of federal AGI/filing status, I'm unsure how to prepare the CO return(s).

Do I prepare 2 MFS returns for CO, each showing half the CO wages/tax withheld?

Or do I mock up a federal MFS return for that spouse without the 8958 allocations to get her amounts to flow through to CO? In which case, I imagine the CO return can't be e-filed, since CO is a piggyback filing state.

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BobKamman

Level 15

@qbteachmt is the expert around here for married couples with income from both community property and non-community property states.

qbteachmt

Level 15

Thanks for that shout-out, but I am no expert for community States or multiple States or even individual States. There are some things I follow closely and stay current on, and there are some things I happen to have researched or will research, but far from an expert.

https://www.irs.gov/publications/p555

NM is a community property State, so that would all be split. CO is a martial property State, similar to mine. You didn't note if that was earned with a presence in CO, or by remote work, or? A nonresident is required to file a Colorado income tax return if they: are required to file a federal income tax return, and had taxable Colorado-sourced income.

"Married taxpayers who file their federal income tax returns separately must also file their Colorado income tax returns separately."

From: https://tax.colorado.gov/income-tax-topics-part-year-residents-nonresidents

And: https://tax.colorado.gov/part-year-and-nonresident

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M

MC4Author

Level 2

Hi qbteachmt, thanks for taking the time to reply during these busy times. Most of my state returns are NJ/PA, so my experience in this area is limited.

The CO wages are due to her performing services in CO. I do understand the 1040 and NM allocation/preparation, just haven't been able to find specific guidance on how to prepare their CO return(s).

I know CO filing status will have to be MFS; I would assume that a marital property state would not follow 8958 allocations and thus she would report her actual own amounts on her CO return - but it won't be consistent with her federal AGI...

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