Allocation of Community Property for MFS

[CVTS]

Once I have determined the allocation of community property, do I just change the income such as wages & tax withheld to the correct portion? These amounts will not be the same as the W2 & I would imagine an IRS notice would be generated.

[itonewbie · Accepted solution]

That's why you need to file F.8958 with the MFS return to show the allocation.

[ScottSandy]

Ok... I've filled out Form 8958, allocating the income & withholding pieces to each spouse on both their MFS returns, but it has no impact on the income/withholdings that show on the face of the 1040. Wages & taxes are showing as they were reported/entered on the W-2, NOT by how they're allocated on Form 8958.

Is there a toggle to activate Form 8958? Do I have to adjust the W-2's to correctly allocate the 50% to each spouse?

[itonewbie]

That's a "dumb" but necessary form.  Numbers there don't flow anywhere.  You will need to manually split the return.

[ScottSandy]

Ah, ok, that makes sense.

So, I need to split out everything manually, which I have mostly done. I'm struggling with the W-2's, though. Splitting wages & federal income taxes is easy enough, but what about SS & medicare wages/taxes? What about all the items in Box 12? Am I splitting all of that as well?

Also, to get the income of the spouse 1 onto spouse 2's return, I'll be entering that 1/2 W-2 there, even though spouse 1 never worked there?

Thanks, this helps immensely!

[CVTS]

You need to split just box 1 & 2 and state wages & withholding. Enter half of  the spouses W2 but do not indicate it's the spouse's. 

If you have other items like interest, change amount.

If you have self employed spouse, it gets more interesting.

[ScottSandy]

I gotcha!

Thank you so much, I've been battling through this return for hours trying to get it sorted.

I only have wages & interest, so it shouldn't get more interesting.

Thanks again!

[ScottSandy]

I may have spoke too soon... What about items that impact additional medicare tax? when I split out the income between spouses, both will have to file Form 8959. I'm guessing I split box 5 50/50 between them as well, so that the additional medicare taxes will calculate for both spouses?

Thanks again!

[CVTS]

That's what I would do. Be sure it's on the Allocation Form too.

[Bridgey]

What software are you using?  You have to make sure your settings to address MFS in a community property state and it will split most of the required information for you when you split the returns.  There are some items that you will still have to manually adjust but for the most part, everything is done with the click of a button!

[Terry53029]

If you are using ProSeries 

Note: Your entries on this form will have no impact on either the federal or state return.

If you need to make any adjustments to the actual tax return, you must do so before completing this form.

The initial calculation on this form pulls the amounts reported on the tax return and displays them in column B for the Taxpayer.

You must manually allocate all items, and enter any amounts allocated to the other spouse or RDP in column C.

[MallyK]

Are these amounts on the 8958 automatically pulled in Proconnect? If so, how do you get them to pull?