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Author: rosewine Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121599  
Subject: More CA MFS Questions Date: 4/15/2011 11:45 PM
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I hate asking this on 4/15 but if I don't get this finished by Monday, I won't get paid for doing it.

Most of the income items are the same as 2009, but from the reading I've done, I don't think the California preparer divided it correctly last year. It appears that Wages and Schedule C income should be split as should deductions for community property but what about unemployment (on federal) and withdrawals from a 401K plan? Individual Retirement accounts are individual so it seems like the 401K withdrawal should be also, but we all know that logic doesn't have much to do with taxes.

For 2009, the preparer only split the W2 income between the spouses. If I follow that pattern it won't make much difference in the returns since their W2 income was within $200 of each other.

Thanks!
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Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 113143 of 121599
Subject: Re: More CA MFS Questions Date: 4/16/2011 12:11 AM
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Sched C income is community income, just like wages. The only trick is that you'll have to override the SE calcs, as you need to hit the correct spouse for the SE tax on all of their income. That part is still separate. And the spouse picking up the 1/2 of Sch C income (the one that isn't self-employed) will also need an override to make sure they don't pay SE tax.

I'd guess that unemployment is also community income. And that the 401k withdrawal is not. But don't quote me on those.

Do you happen to use Lacerte? If so, I've found their tool to split a joint return into separate returns is pretty good. Just make sure that all of the income and deductions are properly coded as taxpayer, spouse, or joint.

--Peter

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Author: rosewine Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 113147 of 121599
Subject: Re: More CA MFS Questions Date: 4/16/2011 7:06 AM
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Thanks, Peter.

This pretty much confirms what I thought. It seems that every year I get a crash course in some other state's tax rules and this year it's CA MFS. I just wish they'd come in the first of March when I had more time.

I'm a seasonal Block employee so use their software which also does a pretty good job on splitting joint to separate. Unfortunately, I started these folks as MFS so it's a bit more of a challenge.

I may work some off season this year and will definitely take another look at this one if I do.

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