Filing taxes NRA and community property...help!

[Wuozopo 4,293]

1 hour ago, user555 said:

This sounds like we need an ITIN if the NRA is going to file a separate return. She isn't and so an ITIN is not needed)

• If you do the form 8958 and split the income with her (still being debated) then you would file MFS for only the part in your column. Who is going to file MFS for the income in her column if not her? ITIN needed. 
• If you file a joint return to take advantage of the tax savings over MFS, then ITIN needed. 
• If you decide screw the 8958,  claim all the income as your sole property on a MFS return, then she files nothing so no ITIN.
   

 

[kris&me 572]

Upon reading several IRS publications from the days when this was 1st implemented,  i have found  that this form was used in the past to protect "Innocent spouses"  with tax obligations concerning tax issues and businesses.  and was referred to as "The Innocent Spouse Relief" .  when people filed this form, it was taking 8 to 9 months to do the process under the past rules.

 

IRS says this:  The innocent spouse rule allows a taxpayer to avoid a tax obligation arising from errors made by a spouse on a joint return. Most commonly, the error involves unreported income or an inflated deduction. ... The taxpayer must apply for relief within two years of the IRS initiating collection.Aug 11, 2019.  

 

Now,  it is needed when 2 are filing separate to allow faster processing as the taxpayer was to provide the info (not IRS researching for the info)

the rule also takes away alimony as a deduction.

 

One article said spouses were filing separate and both claiming the children and this rule will hope to stop that

Another article i found says this  Under the new law, missing children cases will be added to the existing list of circumstances under which the IRS may release tax information to investigating authorities. This could greatly aid law officers, especially in those nearly 200,000 a year children abduction cases where a youngster is taken by a relative or family member. 

 

So,  there are several reasons to make MFS taxpayers do the form (which is not new)

 

But why not MFJ and be able to have the larger deduction as joint (iTIN applied for with form W7) and form 2555 for the foreign income exclusion which is well over $100,000.

[user555 196]

here is post about this from 7 years ago 

 

[user555 196]

On 2/17/2020 at 2:24 PM, travis1983 said:

m going to visit them tomorrow.

What did you find out?

[user555 196]

On 2/18/2020 at 1:04 AM, kris&me said:

foreign income exclusion

California does not allow this. Only the federal level allows it. California has some of the strictest rules on domicile and worldwide income. 

[user555 196]

This is my opinion on what I've read so far. You first have to decide how you're going to do your state taxes because the federal form says to do whatever your state does. In California, it is a community property state. They want you to split income and property 50/50. So, if you file MFJ for the state, you have to do that at the federal level. An ITIN is needed for both. You can file MFS for state and federal and lose out on some taxes savings and write a transmutation document to convert all your community income to separate income. This means you don't have any community income any more. Each party has their own income. If you made an oral agreement before marriage to treat your income this way, put it in writing now. California only recognizes a written agreement. Thus, you can file MFS at the state and federal levels without all those extra forms and only report your income, but you'll lose out on a bigger refund.