How Do You File Taxes in a Community Property State?


Quick Answer

When married taxpayers file taxes separately, the community property rules that apply in their state come into play, according to Intuit. As of 2015, community property laws must be followed when filing taxes in these nine states: California, Arizona, Idaho, Wisconsin, Texas, Washington, Nevada, Louisiana and New Mexico.

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Full Answer

In addition, in California, Nevada and Washington, community property laws also apply to same-sex registered domestic partners, according to Intuit TurboTax. Unless married under state law, RDPs must file separate federal income tax returns as single or head of household and include their separate and community income.

Community property laws consider spouses to equally share the income and assets acquired after the wedding. In some states, income earned from separate property, such as dividends paid on stocks owned prior to the marriage, is considered to be separate property, but in other community property states, it is considered to be income earned equally between the spouses, states Intuit TurboTax. When filing taxes, individuals in community property states must report all of their separate income, as well as 50 percent of the spouse's income and half of the income generated by community assets. It is suggested by the IRS that married couples look at their tax liability both for married filing jointly as well as married filing separately in order to determine which generates the most savings.

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