Community property laws apply to married individuals living in community property states who file separate federal tax returns. Each spouse must report half of combined community income and deductions in addition to his or her separate income and deductions. For example, each spouse reports half of their own W-2 wages and half of their spouse’s W-2 wages on their MFS tax return.
If you are filing the return as married filing separately and you live in a Community Property State (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin) the MFS Allocation Record must be completed with the return. Community property laws affect how income is figured on the federal income tax return. A registered domestic partner in California does not include one-half of their partner’s income on their separate tax return.
To access the MFS Allocation Record, from the Main Menu of the Tax Return (Form 1040) select:
- Miscellaneous
- MFS Allocation Record for Community Property States
- Select Husband or Wife, depending on who you are filing this return for. The information from the tax return will pull to the correct column of the record.
- Fill in the amounts from the spouse’s tax return – If you do not know the spouse’s income information you can leave the information blank. Please keep in mind that this may cause some delay in the processing of the return and the issuance of a refund check.
NOTE: This is a guide on entering the MFS Allocation Record into the Keystone Tax Solutions program. This is not intended as tax advice.