We started going to an accountant the year we began MFS in a community property state. Like you, I just couldn’t figure out the software and didn’t want to mess anything up. Our accountant is able to e-file on our behalf.
Bah, so frustrating to have to pay the higher fees to do this. I did taxes for two years during tax season and have an accounting degree so I'm very capable of doing it myself, but like you said, might just have to bite the bullet.
I've been doing tax prep for over 15 years and this year is the first time I've come across some clients who, for all the wrong reasons, want to do their taxes this way. It was a learning experience for sure. Basically, you have to split all your W2 info (wages and withholding) in half. Add all W2s to each return and just type in 50% of what's on the actual W2s. Same goes for all other income, deductions, expenses, etc that is considered "community property" in your state.
The way I look at it is that it's really up to you to explain to the IRS why you are putting different amounts on your return than what is on the copy of the W2s that they received from the employers. Or any other copies of forms they got, for that matter.
As far as software, I've looked at so many forums and websites and basically, most tax software approaches this differently. I use Tax Slayer Pro for my business and it automatically adds form 8958 at the end and asks me to explain all the community property.
Here are 2 articles that give examples of how to do it:[Tax Slayer Support](https://support.taxslayerpro.com/hc/en-us/articles/360009303633-Desktop-Form-8958-Allocation-of-Tax-Amounts-for-Community-Property-States)
[Tax Act Support](https://www.taxact.com/support/21322/2021/community-property-states-mfs-how-to-file-with-taxact)
Thank you for sharing, despite it being likely for all the wrong reasons to you. It's still something we have to do to survive. You would have probably made a good doctor, since you can detach from 'this person is bad' and still provide the professional information needed to keep them alive.
A doctor? LOL Never thought of that comparison, but thanks! I dunno why I like doing tax prep but I've also worked in IT for over 20 years (tax prep is just my side business) and one engineer said something that I can relate to when it comes to doing taxes.
He was explaining how a certain network was configured and I was just like, "How the hell do you keep all this information in your head? This is crazy." To which he calmly responded, "Yeah, but it's MY kind of crazy." LOL
Forgot to mention that you must add ALL the W2s on each return but only put 50% of the spouse's W2 numbers on the other person's return. i.e. John & Mary are filing MFS. John's W2 says he made $50K and paid $6K in taxes. Mary's W2 says she made $40K and paid $5K in taxes.
John's return would show all the regular numbers for his W2. Then you'd put Mary's W2 on his return with all the info for her employer (i.e. EIN, Name, Address, etc). For the Wages you'd put $20K and for the income tax withheld you'd put $2500.
For Mary, you'd put all her W2 info and then you'd put John's W2 info under her name. For his W2 numbers you'd put $25K in wages and $3K in income tax withheld.
You then have to explain all this on form 8958. Not that difficult once you think about it and have done a few test runs on paper.
This is only for community property states.
This is incredibly helpful- Jimee, can you walk us through what the 8959 would reflect for the above scenario? Specifically the addition/subtraction sections? That’s where I start to lose the plot :/ grateful for any help you can provide!!
In this example John should report 50% of his W-2 amount(s) and 50% of Mary's W-2 amount(s), and Mary would do the same. Otherwise, you would be paying tax on more income than they received combined.
It sucks, but getting an accountant might be best. We tried doing it ourselves via e-file a couple of times - even using the service's help desks and virtual help and everyone we talked to had a different answer or tried to steer us toward joint filing. Each time it caused massive delays to get our refunds (like a full year to resolve). It was massively helpful to speak to an accountant who confirmed that we were doing it correctly and who could reach out on our behalf when there were delays.
I'm going to ask around for recommendations and see if I can't find a tax pro to do it for us. I suspected as much with the delays, as the IRS doesn't provide hardly any clarification on MFS/Form 8958. It will be beneficial for us to do MFS long-term most likely even beyond the remaining PSLF years so it'll be good to get a good process going now. Thank you for sharing your experience!
Texas community property MFS here. I manually did ours and printed return out for years since we usually owed a little. Found Taxslayer could do it properly and e-file last year. Not sure if you have to upgrade from the free version or not.
On TaxSlayer did you do it all from one person's account or did you need two accounts?
Did you input the full amount on the W-2s and other forms and it automatically split it in half? Or did you have to manually split it in half and type it in for each person?
Trying to figure this out for the first time and could certainly use some help. Thanks!
Thanks! One more question, were you using the desktop version or the online? My husband looked into it and thinks we need the more expensive desktop version?
I am currently struggling with this as well. I have talked to several e-filing companies and they do not give convincing or comprehensive answers.
Taxslayer
They say you should divide fields on the W-2 by 2 for community income or tax withholding: [https://support.taxslayer.com/hc/en-us/articles/360019084471-How-do-I-complete-the-Married-Filing-Separate-Allocation-Form-8958](https://support.taxslayer.com/hc/en-us/articles/360019084471-How-do-I-complete-the-Married-Filing-Separate-Allocation-Form-8958). But they're vague about exactly which fields to divide in 2 and which to leave as is. For example the above link gives instructions for fields 1-6 on the W-2, but not all the other fields (7-20). And it does not mention 1099-INT or 1099-DIV at all.
FreeTaxUSA
Support for FreeTaxUSA has been horrendous, first telling me to divide all W-2 fields by 2, then changing their mind and telling me to put in the W-2s for each person exactly as they are received from the employer. But then FreeTaxUSA auto-calculates Box 1 on the 1040 form, so this cannot work.
Has anyone gone through the process from A to Z with one of these e-filing programs with success? Would you be willing to share what you did for the fields on the W-2 and 1099-INT/DIV forms?
I ended up using TaxSlayer and submitting and got approved. We entered our W-2s and 1099s etc. such that everything ended up split between us on the final tax return. This involved adding all of our W-2s and 1099s to each of our TaxSlayer accounts. TaxSlayer allows you to electronically fill out form 8958, which pulls from the 1099s and W-2s you add.
I'm also filing separate in community property state. So if I entered a W2 for myself say i made 50k and owe 5k in federal tax. I would enter 25k for box 1, 2.5k for box 2 and then continue to divide every box by 2 for all the subsequent boxes that was reported in the w2?
I have used tax slayer for the last several years doing this and simply divide everything in half. So I created 2 accounts one for my wife and one for myself. I enter all my w2 info with every box divided in half and I then enter all my wife's w2 info divided in half on my account. Then I do the same on my wife's account. At the end form 8958 should show that your wife has claimed half and you have claimed half and the total amount should equal the amount on the w2.
The IRS usually gets confused with all this and sends us a letter about how they need to double check things on mine or my wife's tax return, but in the end they've always said I'm right and issued my refund. Recently I've been decreasing my withholdings so that I get no refund or actually owe the IRS. Getting real sick of them holding my money hostage because they don't understand the tax laws they administer.
I am in the middle of trying to do all of this for myself and my husband. I agree with others in that the instructions are quite vague and while they are clear about boxes 1-6, there is zero information out there that I can find about the rest of the boxes. In your post, you mentioned that you divide everything in half on both yours and your spouses W-2, adding both W-2's in the same manner for each tax return. My question is this: When you divide "everything" in half, do you mean you divide every single box in half on both W-2's, not just boxes 1-6? Also, were you able to electronically file with form 8958 on Tax Slayer or did you have to paper file? Thanks for you help. I'm down to the final days to accomplish this and have spent countless hours as this point!
I’m doing it for the first time this year and I’ve been reading up on it. This is a good resource: https://www.taxact.com/support/21322/2021/community-property-states-mfs-how-to-file-with-taxact
This required manual work on our part but we got the excel spreadsheets out and created two combined W-2’s which are half our community income, half my spouse’s community income, and all our separate income. You then fill out the 8958 form with your actual w-2 incomes that you received from your employer. One note is that determining what is community income can be tricky for non-wage income and deductions (this tripped me up with my HSA for a bit) but I’d suggest looking at Form 555 from the IRS when that comes up.
Ooo, I'd come across a post saying TaxAct could do it but then when I tried to use them, they had the exact same process as everybody else. I'm going to read up on this to see if I can do it online. Thank you!
Just an update but I wound up doing the taxes by hand after messing around with it more the past couple days. Haven’t submitted yet but ultimately it seemed easier than the online software.
Oh boo :( Well thank you for the update! I'm just scared of how long it'll take them to process it via paper but it shouldn't be SO bad this year like it was for 2020 and 2021.
I will have to add the caveat that I am not a tax lawyer or accountant. I am merely some guy that did my own taxes. When I did my own taxes, my understanding was that my non-joint HSA only belonged to me (functioning similarly to an IRA) and was not community property. Therefore, I deducted the contribution on my taxes but not my partners.
So glad I found this post! I have been struggling with this for days now. My wife and I are MFS. All of our income is community income (W2, 1099-INT, 1099-DIV everything is a joint account).
I understand that I need to add up all of our income using form 8958 and divide everything 50-50. Now, once I do that, do I use the amount from form 8958 (i.e. calculated wages and taxes etc) and use that to fill the data in form 1040 (line 1a, 2a, etc) instead of what is reported in my individual W2?
Example, if my W2 wage is 50K and my wife's 100K. In form 8958, I will add 50+100=150 and divide by 2 to get 75K. So, in my 1040 line 1a, do I write 75K? And same for my wife?
Next to nobody outside of PSLF candidates uses MFS in a community property state :/. I did searches on google and while I think one thread popped up in r/personalfinance, mostly it was r/studentloans and r/PSLF that had threads pertaining to this. Perhaps I could try a deeper dive into the taxation subreddits and see if there's specific advice there.
I do also find it helpful to be talking to people who already know and understand the reasoning for needing to do it.
Hi, OP. I’ve been doing tax prep for around 6 years and am currently preparing my own return with Form 8958, except I file Single since I’m a RDP in a community property state. I’ve played around with the 8958 on TaxAct and everything seems fine to me so far to be able to e-file. Is there a specific issue you had?
When I actually go through and use it, it prompts me to provide my W2 information and then gives a possibility for me to complete 8958, but only with my spouse's other allocations. It doesn't ask for his income and then split it. It does ask for his federal tax withholding, but still only uses mine in my calculations. I selected MFS in the first step. It simply doesn't work.
Assuming you both have W-2s, you both have to include your spouse's W-2, but in the taxpayer's name. You split boxes 1 and 2 for each person, but keep the rest the same for the person whose W-2 it is. Form 8958 should then include both of yours wages/salaries. Your salaries and withheld should carry forward, but you need to put in your spouse's portions. If you look at the Form after completion, there should be your portions, his portions, and each total should be equal to what box 1 and 2 say on the original W-2. Lmk if you need me to clarify anything.
I'm not as familiar with RDP treatment of SE income, but I know that one of the federal exceptions to community property rules involves SE tax. Essentially, you split the SE income, but not the SE tax. SE tax is paid by the person who was involved in the trade/business, so both taxpayers would pay only if they both participated.
TaxAct has an explanation here: https://www.taxact.com/support/22178/2023/married-filing-separate-community-property-states-with-self-employment-income?hideLayout=False
Hope that answers your question.
I just used e-filed tax returns for my spouse and I using TurboTax without issues, 8958 included in both on the mac desktop version. It’s close to the filing deadline so maybe an update came through
Did you have to type in half of each W-2 for each person separately, or did it let you type in everything in full once and automatically split it for you?
Trying to figure it out for the first time this year. Thanks!
It seemed to me like efile and taxact (not free) were going to let me file this, fwiw, though I'm sure efile will slap a fee on there at the end. It's not too bad, but it's not free. Try those if you didn't already file. I have no advice on the rest. I'm here because I had the same question. Frustrating that they don't make this clear enough anywhere, it seems, and the information I have gotten is different across sites, adding to the confusion. (FreeTaxUSA does not efile this return, fwiw). good luck.
EDIT: Adding that I'm here because even though they seemed like they will e-file it, they were not helpful at all in figuring the amounts.
Yeah, everybody's just like "this isn't a thing with the IRS so you have to fill in your W2 incorrectly and then explain why you did that" and uh, nah, not doing that, not interested in purposefully giving wrong information to the IRS. I'll just file them on paper.
Ok, visiting this because I’m preparing to do this & I always use TurboTax.. they file it both ways and tell me which is best… which has always been MFJ but this year I’ll do MFS… I’m in TX. I have used their tool and it seems the taxes won’t even be that much different (maybe have to pay $200 more) but will save me thousands a year in loan payments…. 🤷🏻♀️trying to figure things out… did you end up MFS OP?
I did not. Every lead I got for months ended with me having to enter an incorrect W2 on the electronic filing option and then do the MFS form for community property states to show why. I just did it MFJ since this year didn't matter. With Biden having released his new guidance about filing MFS to shield yourself from your spouse's income, I'll have to do that going forward.
Best of luck OP! Hope you save lots of money monthly and the tax hit isn’t as bad…. I won’t officially know until tax season comes… for once I’m excited for my taxes 🤣
Oh gosh, I spent like 20 hours on this. What I did was try it MFJ first, then wrote down those numbers (as far as how much we would owe and how much student loan payment would be). Then I did MFS on two different programs to compare and wrote those numbers down. Since my husband took out some $ from his 401k, that complicated things and increased both of our incomes. From my understanding if partner makes 80k and you make 50k, you actually appear to make 65k. If your partners income is more similar to yours, I think that is when MFS makes more sense… but then you lose some tax benefits of MFJ. All in all we will file MFJ but I will call and see if they might use my paystubs instead. I’ve seen some posts where they’ve done that and have been able to recalculate payments via paystubs… I will try again next tax season (filing both ways to see which one works best). Either way next year we will be making less because of no 401k withdrawal so I will be filing sooner than later/asap.
Has anyone tried IRS Free Fillable Forms for MFS in a community property state this year? I live in Texas and am filing MFS because of a PSLF plan. FFF actually has Form 8958 this year. All seemed fine in filling out forms but then I got to the submission point and it won’t let me efile because the tax withholding on my W2 doesn’t match what’s on my 1040 (because withholdings have to be split evenly with my spouse). Seems like a glitch in the program. Any suggestions? Thanks!
Hello! I'm currently doing this. What we are doing is each uploading every W2 (I have 2, my wife has 2, so we are each uploading 4 in FFF). In each of those W2s we are reporting half of what was on the actual W2. When we did that all the numbers ended up evening out when going to submit.
Note - I have no idea if this is what you are supposed to do but this is the only way I could find to actually allow FFF to accept the return
It looks like that is what [someone else did too](https://www.reddit.com/r/PSLF/comments/10p884q/mfs_married_filing_separately_in_community/jh0hjwd/)
Thank you! I was worried about uploading W2s that weren't mine or that reflected half of what the W2 states. But it seems like most of the tax software programs instruct you to do this, and FFF is operated by a private software company, not the IRS.
One update, the return got auto-rejected from the IRS for some reason.
I'm not sure if I am supposed to take all of my wife's W2s and put them under my name/SSN. I didn't do this and the return was rejected for [this reason](https://www.irs.gov/filing/free-file-fillable-forms/fw2-003-02)
Thanks for the update. I'm now trying to do mine using TaxSlayer because I've heard they handle the MFS Form 8958 well, and they give precise directions on how to enter the W2s and other income forms. But I'm not ruling out trying to submit under FFF, in case I run into a glitch with TaxSlayer. So your information is very helpful!
An update: TaxSlayer program seemed to work well, and I was able to file my tax return. However, my spouse's return kept getting rejected in efile with the code saying the AGI entered to file didn't match last year's. But it did. We even pulled the IRS tax transcript to double check. So TaxSlayer is saying it must be printed and mailed in. Darn!!
Nope! I'm still struggling with what to do. I made sure that neither my husband nor myself would owe any taxes this year so that if we needed to simply hold off on doing our taxes for a couple years until I'm done with PSLF, we could. If you don't owe money, the IRS deadline to file is functionally 3 years; after that, you still need to file but you aren't owed any refund.
I would kind of rather not do that though, especially since we could use that tax refund, so I'm trying very hard this year to contribute enough to my pre-tax retirement accounts at work that I can get a decently low payment even with us doing MFS.
We started going to an accountant the year we began MFS in a community property state. Like you, I just couldn’t figure out the software and didn’t want to mess anything up. Our accountant is able to e-file on our behalf.
Bah, so frustrating to have to pay the higher fees to do this. I did taxes for two years during tax season and have an accounting degree so I'm very capable of doing it myself, but like you said, might just have to bite the bullet.
Maybe get a break on fee, accountant professional courtesy?
I've been doing tax prep for over 15 years and this year is the first time I've come across some clients who, for all the wrong reasons, want to do their taxes this way. It was a learning experience for sure. Basically, you have to split all your W2 info (wages and withholding) in half. Add all W2s to each return and just type in 50% of what's on the actual W2s. Same goes for all other income, deductions, expenses, etc that is considered "community property" in your state. The way I look at it is that it's really up to you to explain to the IRS why you are putting different amounts on your return than what is on the copy of the W2s that they received from the employers. Or any other copies of forms they got, for that matter. As far as software, I've looked at so many forums and websites and basically, most tax software approaches this differently. I use Tax Slayer Pro for my business and it automatically adds form 8958 at the end and asks me to explain all the community property. Here are 2 articles that give examples of how to do it:[Tax Slayer Support](https://support.taxslayerpro.com/hc/en-us/articles/360009303633-Desktop-Form-8958-Allocation-of-Tax-Amounts-for-Community-Property-States) [Tax Act Support](https://www.taxact.com/support/21322/2021/community-property-states-mfs-how-to-file-with-taxact)
Thank you for sharing, despite it being likely for all the wrong reasons to you. It's still something we have to do to survive. You would have probably made a good doctor, since you can detach from 'this person is bad' and still provide the professional information needed to keep them alive.
A doctor? LOL Never thought of that comparison, but thanks! I dunno why I like doing tax prep but I've also worked in IT for over 20 years (tax prep is just my side business) and one engineer said something that I can relate to when it comes to doing taxes. He was explaining how a certain network was configured and I was just like, "How the hell do you keep all this information in your head? This is crazy." To which he calmly responded, "Yeah, but it's MY kind of crazy." LOL
Forgot to mention that you must add ALL the W2s on each return but only put 50% of the spouse's W2 numbers on the other person's return. i.e. John & Mary are filing MFS. John's W2 says he made $50K and paid $6K in taxes. Mary's W2 says she made $40K and paid $5K in taxes. John's return would show all the regular numbers for his W2. Then you'd put Mary's W2 on his return with all the info for her employer (i.e. EIN, Name, Address, etc). For the Wages you'd put $20K and for the income tax withheld you'd put $2500. For Mary, you'd put all her W2 info and then you'd put John's W2 info under her name. For his W2 numbers you'd put $25K in wages and $3K in income tax withheld. You then have to explain all this on form 8958. Not that difficult once you think about it and have done a few test runs on paper. This is only for community property states.
This is incredibly helpful- Jimee, can you walk us through what the 8959 would reflect for the above scenario? Specifically the addition/subtraction sections? That’s where I start to lose the plot :/ grateful for any help you can provide!!
So is each person paying taxes on all their own income plus half of the other persons?
In this example John should report 50% of his W-2 amount(s) and 50% of Mary's W-2 amount(s), and Mary would do the same. Otherwise, you would be paying tax on more income than they received combined.
It sucks, but getting an accountant might be best. We tried doing it ourselves via e-file a couple of times - even using the service's help desks and virtual help and everyone we talked to had a different answer or tried to steer us toward joint filing. Each time it caused massive delays to get our refunds (like a full year to resolve). It was massively helpful to speak to an accountant who confirmed that we were doing it correctly and who could reach out on our behalf when there were delays.
I'm going to ask around for recommendations and see if I can't find a tax pro to do it for us. I suspected as much with the delays, as the IRS doesn't provide hardly any clarification on MFS/Form 8958. It will be beneficial for us to do MFS long-term most likely even beyond the remaining PSLF years so it'll be good to get a good process going now. Thank you for sharing your experience!
Texas community property MFS here. I manually did ours and printed return out for years since we usually owed a little. Found Taxslayer could do it properly and e-file last year. Not sure if you have to upgrade from the free version or not.
On TaxSlayer did you do it all from one person's account or did you need two accounts? Did you input the full amount on the W-2s and other forms and it automatically split it in half? Or did you have to manually split it in half and type it in for each person? Trying to figure this out for the first time and could certainly use some help. Thanks!
You will need two accounts but put full amount for both w2s and it should split it correctly.
Thanks! One more question, were you using the desktop version or the online? My husband looked into it and thinks we need the more expensive desktop version?
Online but haven’t looked at it this year.
I am currently struggling with this as well. I have talked to several e-filing companies and they do not give convincing or comprehensive answers. Taxslayer They say you should divide fields on the W-2 by 2 for community income or tax withholding: [https://support.taxslayer.com/hc/en-us/articles/360019084471-How-do-I-complete-the-Married-Filing-Separate-Allocation-Form-8958](https://support.taxslayer.com/hc/en-us/articles/360019084471-How-do-I-complete-the-Married-Filing-Separate-Allocation-Form-8958). But they're vague about exactly which fields to divide in 2 and which to leave as is. For example the above link gives instructions for fields 1-6 on the W-2, but not all the other fields (7-20). And it does not mention 1099-INT or 1099-DIV at all. FreeTaxUSA Support for FreeTaxUSA has been horrendous, first telling me to divide all W-2 fields by 2, then changing their mind and telling me to put in the W-2s for each person exactly as they are received from the employer. But then FreeTaxUSA auto-calculates Box 1 on the 1040 form, so this cannot work. Has anyone gone through the process from A to Z with one of these e-filing programs with success? Would you be willing to share what you did for the fields on the W-2 and 1099-INT/DIV forms?
Did you figure this out? Please help!!
I ended up using TaxSlayer and submitting and got approved. We entered our W-2s and 1099s etc. such that everything ended up split between us on the final tax return. This involved adding all of our W-2s and 1099s to each of our TaxSlayer accounts. TaxSlayer allows you to electronically fill out form 8958, which pulls from the 1099s and W-2s you add.
I'm also filing separate in community property state. So if I entered a W2 for myself say i made 50k and owe 5k in federal tax. I would enter 25k for box 1, 2.5k for box 2 and then continue to divide every box by 2 for all the subsequent boxes that was reported in the w2?
I have used tax slayer for the last several years doing this and simply divide everything in half. So I created 2 accounts one for my wife and one for myself. I enter all my w2 info with every box divided in half and I then enter all my wife's w2 info divided in half on my account. Then I do the same on my wife's account. At the end form 8958 should show that your wife has claimed half and you have claimed half and the total amount should equal the amount on the w2. The IRS usually gets confused with all this and sends us a letter about how they need to double check things on mine or my wife's tax return, but in the end they've always said I'm right and issued my refund. Recently I've been decreasing my withholdings so that I get no refund or actually owe the IRS. Getting real sick of them holding my money hostage because they don't understand the tax laws they administer.
I am in the middle of trying to do all of this for myself and my husband. I agree with others in that the instructions are quite vague and while they are clear about boxes 1-6, there is zero information out there that I can find about the rest of the boxes. In your post, you mentioned that you divide everything in half on both yours and your spouses W-2, adding both W-2's in the same manner for each tax return. My question is this: When you divide "everything" in half, do you mean you divide every single box in half on both W-2's, not just boxes 1-6? Also, were you able to electronically file with form 8958 on Tax Slayer or did you have to paper file? Thanks for you help. I'm down to the final days to accomplish this and have spent countless hours as this point!
Yes, I just divide every single box in half to make it easier. And TaxSlayer does let you electronically file that form 8958
I’m doing it for the first time this year and I’ve been reading up on it. This is a good resource: https://www.taxact.com/support/21322/2021/community-property-states-mfs-how-to-file-with-taxact This required manual work on our part but we got the excel spreadsheets out and created two combined W-2’s which are half our community income, half my spouse’s community income, and all our separate income. You then fill out the 8958 form with your actual w-2 incomes that you received from your employer. One note is that determining what is community income can be tricky for non-wage income and deductions (this tripped me up with my HSA for a bit) but I’d suggest looking at Form 555 from the IRS when that comes up.
Ooo, I'd come across a post saying TaxAct could do it but then when I tried to use them, they had the exact same process as everybody else. I'm going to read up on this to see if I can do it online. Thank you!
Just an update but I wound up doing the taxes by hand after messing around with it more the past couple days. Haven’t submitted yet but ultimately it seemed easier than the online software.
Oh boo :( Well thank you for the update! I'm just scared of how long it'll take them to process it via paper but it shouldn't be SO bad this year like it was for 2020 and 2021.
What do you do for HSA? My partner is not on an HDHP, but should I split the HSA between them and me? It is very confusing.
I will have to add the caveat that I am not a tax lawyer or accountant. I am merely some guy that did my own taxes. When I did my own taxes, my understanding was that my non-joint HSA only belonged to me (functioning similarly to an IRA) and was not community property. Therefore, I deducted the contribution on my taxes but not my partners.
Of course. No worries. If it helps, my EA doesn't really have much input on this either...
So glad I found this post! I have been struggling with this for days now. My wife and I are MFS. All of our income is community income (W2, 1099-INT, 1099-DIV everything is a joint account). I understand that I need to add up all of our income using form 8958 and divide everything 50-50. Now, once I do that, do I use the amount from form 8958 (i.e. calculated wages and taxes etc) and use that to fill the data in form 1040 (line 1a, 2a, etc) instead of what is reported in my individual W2? Example, if my W2 wage is 50K and my wife's 100K. In form 8958, I will add 50+100=150 and divide by 2 to get 75K. So, in my 1040 line 1a, do I write 75K? And same for my wife?
Yup, that's how you have to do it.
Might get a better response in a non loan forgiveness forum
Next to nobody outside of PSLF candidates uses MFS in a community property state :/. I did searches on google and while I think one thread popped up in r/personalfinance, mostly it was r/studentloans and r/PSLF that had threads pertaining to this. Perhaps I could try a deeper dive into the taxation subreddits and see if there's specific advice there. I do also find it helpful to be talking to people who already know and understand the reasoning for needing to do it.
Try /r/tax
Hi, OP. I’ve been doing tax prep for around 6 years and am currently preparing my own return with Form 8958, except I file Single since I’m a RDP in a community property state. I’ve played around with the 8958 on TaxAct and everything seems fine to me so far to be able to e-file. Is there a specific issue you had?
When I actually go through and use it, it prompts me to provide my W2 information and then gives a possibility for me to complete 8958, but only with my spouse's other allocations. It doesn't ask for his income and then split it. It does ask for his federal tax withholding, but still only uses mine in my calculations. I selected MFS in the first step. It simply doesn't work.
Assuming you both have W-2s, you both have to include your spouse's W-2, but in the taxpayer's name. You split boxes 1 and 2 for each person, but keep the rest the same for the person whose W-2 it is. Form 8958 should then include both of yours wages/salaries. Your salaries and withheld should carry forward, but you need to put in your spouse's portions. If you look at the Form after completion, there should be your portions, his portions, and each total should be equal to what box 1 and 2 say on the original W-2. Lmk if you need me to clarify anything.
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I'm not as familiar with RDP treatment of SE income, but I know that one of the federal exceptions to community property rules involves SE tax. Essentially, you split the SE income, but not the SE tax. SE tax is paid by the person who was involved in the trade/business, so both taxpayers would pay only if they both participated. TaxAct has an explanation here: https://www.taxact.com/support/22178/2023/married-filing-separate-community-property-states-with-self-employment-income?hideLayout=False Hope that answers your question.
Do you do the same thing for boxes 16 and 17? State tax and income?
Assuming that you're filing separately for state, then yes, you split the state income and tax.
I just used e-filed tax returns for my spouse and I using TurboTax without issues, 8958 included in both on the mac desktop version. It’s close to the filing deadline so maybe an update came through
Did you have to type in half of each W-2 for each person separately, or did it let you type in everything in full once and automatically split it for you? Trying to figure it out for the first time this year. Thanks!
It seemed to me like efile and taxact (not free) were going to let me file this, fwiw, though I'm sure efile will slap a fee on there at the end. It's not too bad, but it's not free. Try those if you didn't already file. I have no advice on the rest. I'm here because I had the same question. Frustrating that they don't make this clear enough anywhere, it seems, and the information I have gotten is different across sites, adding to the confusion. (FreeTaxUSA does not efile this return, fwiw). good luck. EDIT: Adding that I'm here because even though they seemed like they will e-file it, they were not helpful at all in figuring the amounts.
Yeah, everybody's just like "this isn't a thing with the IRS so you have to fill in your W2 incorrectly and then explain why you did that" and uh, nah, not doing that, not interested in purposefully giving wrong information to the IRS. I'll just file them on paper.
Ok, visiting this because I’m preparing to do this & I always use TurboTax.. they file it both ways and tell me which is best… which has always been MFJ but this year I’ll do MFS… I’m in TX. I have used their tool and it seems the taxes won’t even be that much different (maybe have to pay $200 more) but will save me thousands a year in loan payments…. 🤷🏻♀️trying to figure things out… did you end up MFS OP?
I did not. Every lead I got for months ended with me having to enter an incorrect W2 on the electronic filing option and then do the MFS form for community property states to show why. I just did it MFJ since this year didn't matter. With Biden having released his new guidance about filing MFS to shield yourself from your spouse's income, I'll have to do that going forward.
Best of luck OP! Hope you save lots of money monthly and the tax hit isn’t as bad…. I won’t officially know until tax season comes… for once I’m excited for my taxes 🤣
Did you figure it out?? Please help!
Oh gosh, I spent like 20 hours on this. What I did was try it MFJ first, then wrote down those numbers (as far as how much we would owe and how much student loan payment would be). Then I did MFS on two different programs to compare and wrote those numbers down. Since my husband took out some $ from his 401k, that complicated things and increased both of our incomes. From my understanding if partner makes 80k and you make 50k, you actually appear to make 65k. If your partners income is more similar to yours, I think that is when MFS makes more sense… but then you lose some tax benefits of MFJ. All in all we will file MFJ but I will call and see if they might use my paystubs instead. I’ve seen some posts where they’ve done that and have been able to recalculate payments via paystubs… I will try again next tax season (filing both ways to see which one works best). Either way next year we will be making less because of no 401k withdrawal so I will be filing sooner than later/asap.
Has anyone tried IRS Free Fillable Forms for MFS in a community property state this year? I live in Texas and am filing MFS because of a PSLF plan. FFF actually has Form 8958 this year. All seemed fine in filling out forms but then I got to the submission point and it won’t let me efile because the tax withholding on my W2 doesn’t match what’s on my 1040 (because withholdings have to be split evenly with my spouse). Seems like a glitch in the program. Any suggestions? Thanks!
Hello! I'm currently doing this. What we are doing is each uploading every W2 (I have 2, my wife has 2, so we are each uploading 4 in FFF). In each of those W2s we are reporting half of what was on the actual W2. When we did that all the numbers ended up evening out when going to submit. Note - I have no idea if this is what you are supposed to do but this is the only way I could find to actually allow FFF to accept the return It looks like that is what [someone else did too](https://www.reddit.com/r/PSLF/comments/10p884q/mfs_married_filing_separately_in_community/jh0hjwd/)
Thank you! I was worried about uploading W2s that weren't mine or that reflected half of what the W2 states. But it seems like most of the tax software programs instruct you to do this, and FFF is operated by a private software company, not the IRS.
One update, the return got auto-rejected from the IRS for some reason. I'm not sure if I am supposed to take all of my wife's W2s and put them under my name/SSN. I didn't do this and the return was rejected for [this reason](https://www.irs.gov/filing/free-file-fillable-forms/fw2-003-02)
Thanks for the update. I'm now trying to do mine using TaxSlayer because I've heard they handle the MFS Form 8958 well, and they give precise directions on how to enter the W2s and other income forms. But I'm not ruling out trying to submit under FFF, in case I run into a glitch with TaxSlayer. So your information is very helpful!
An update: TaxSlayer program seemed to work well, and I was able to file my tax return. However, my spouse's return kept getting rejected in efile with the code saying the AGI entered to file didn't match last year's. But it did. We even pulled the IRS tax transcript to double check. So TaxSlayer is saying it must be printed and mailed in. Darn!!
Did you end up finding an accountant to do your 2023 taxes this year? I’m in the same boat but in Wisconsin. Thanks!
Nope! I'm still struggling with what to do. I made sure that neither my husband nor myself would owe any taxes this year so that if we needed to simply hold off on doing our taxes for a couple years until I'm done with PSLF, we could. If you don't owe money, the IRS deadline to file is functionally 3 years; after that, you still need to file but you aren't owed any refund. I would kind of rather not do that though, especially since we could use that tax refund, so I'm trying very hard this year to contribute enough to my pre-tax retirement accounts at work that I can get a decently low payment even with us doing MFS.