Community Property - RDP vs MFS

Forum|Forum|5 years ago
April 23, 2021
2 replies
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California couple

I am working on a RDP return. They will file jointly on their state return as allowed for an RDP. For the Federal return a RDP is not recognized so they will file single. My question is, IRS states that RDP's adhere to their states community property laws. Meaning both partners need to report one half of each other's incomes on each Federal return.

I have had a few people file Married Filing Separately (California residents). I have never shared income on their federal returns. They have never been audited or faced any issues from IRS. Why does an RDP have to report shared community property (W2, 1099G, etc..) income but MFS do not?

ProSeries Professional

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Best answer by jeffmcpa2010

Because it is the Law.

And BTW you have been preparing your MFS returns incorrectly, and as a tax practitioner, you are charged with preparing returns correctly even when inconvenient.

J

jeffmcpa2010Answer

Level 10

Because it is the Law.

And BTW you have been preparing your MFS returns incorrectly, and as a tax practitioner, you are charged with preparing returns correctly even when inconvenient.

P

parvitstaxAuthor

Level 6

@jeffmcpa2010 It had nothing to do with convenience. It was more lack of knowledge (blame the education requirements in place). Moving forward will have to report the PITA shared community property. I'm just confused why IRS has not once required an amendment or even FTB for that matter.

So the only benefit of MFS is if you want to separate capital gains or other income from assets prior to marriage? Seems very complicated and should be one of the most expensive returns to file.