Married Filing Separate Efile, Itemized vs Standard Deductions and Allocation in Comm Prop State

[Turtle43]

Background: TP and Spouse will file divorce in April 2020. They stayed in same house in 2019 and spouse travels most of the time for his work overseas. Married Filing Joint filing status used in the past. They have a primary home (Spouse's name on the title only) which the spouse paid for 100% of mortgage and property tax.  They have a prev primary home which turned rental since 2016 and TP paid 100% of mortgage, property tax and all rental expenses.

For 2019, TP came to me to discuss their situation. I did the tax return using TSJ indicators and use the Proseries Pro MFS vs MFJ worksheet and it showed MFJ saves $400.  In the comparison Worksheet, it showed TP column owed 2K and Spouse column owed $9K.  Next, Spouse when to another tax preparer and filed his MFS and he only owed $6K, he took 100% of his own income, and 100% of Itemized Deductions for Mortgage Interest and Property Tax for primary home since he paid all the payments. 

TP wants me to file her 2019 MFS. I had the chance to review the spouse's 2019 MFS Returns and noted he did not allocate this income $164K to TP and no Itemized Ded allocation to TP.  

So I don't have a choice but to include TP's income $96K without allocation to spouse on Form 8958 and she gets to have 100% of Rental activities (Rental Loss went to Passive Activities Losses). This is in Community Property (CA) State.   The couple had been keeping their finances separate although TP stays in the primary home that Spouse pays for.

Questions: 

(1) Efile: Since Spouse already efiled, will I still be able to efile TP's MFS tax return? Will I run into SSN already used in another tax return error?

(2) My understanding is for MFS, if one spouse filed Itemized Deductions, the other has to as well, even if less than Std Deductions.  In this case, Spouse took $29K Itemized Deductions and my client, TP, only had $6K Itemized Deductions. ProSeries used $12,200 Standard Deductions. I am not sure if this is correct?  Maybe I am missing some questions about MFS somewhere? Could not find anywhere in Info Worksheet. Using Itemized Itemized Deductions of $6K vs Std Deductions $12,200 is additional $1,300 of Fed Tax owed.

(3) The income allocation in this case where each spouse took their own, would they get a letter form IRS later?  Total Fed Tax owed to IRS is not a big difference.

Thanks for your time to read and give input. Appreciate clarifications.

[Just-Lisa-Now-]

"In this case, Spouse took $29K Itemized Deductions and my client, TP, only had $6K Itemized Deductions. ProSeries used $12,200 Standard Deductions. I am not sure if this is correct?  "

You needed to mark the box on the fed info worksheet to force itemized deductions (since one spouse itemized, the other should have itemized).

[Turtle43]

Thank you, Lisa. I have found the place to check - Force Itemized Deductions because MFS and spouse used Itemized Deductions.

[Greta]

I wonder if anyone has seen the IRS catch this oversight. I don't imply to file incorrectly, but I don't always have access to the spouse's separately filed tax return.

[BobKamman]

First, the answers in California might be different from those in other community-property states. It sort of sounds like you know the significance of “date of separation” – here’s a brief explanation of how it works in California.

https://www.cadivorce.com/california-divorce-guide/what-to-expect/significance-of-the-date-of-separa...

You write, “So I don't have a choice but to include TP's income $96K without allocation...” Actually, your only choice is to prepare an accurate return that you can sign, under penalty of perjury, as being complete and correct. Don’t feel bad if you decline the work. Her divorce attorney should be able to refer her to someone. You don’t indicate whether you prepared the joint returns in prior years, but if so you have a huge conflict of interest.

I don’t quite understand the general aversion to filing paper returns when worry about e-filing trumps concern about doing the right thing. What will IRS do if her numbers and his numbers don’t match? I do understand that there are many couples who divorce in community-property states each year, and not all of them agree on tax filing. Just do it, and let IRS sort it out if they see a problem. Let the chips fall where they may.