CA - 1 spouse resident; 1 spouse non-resident

[jasdlm]

When I run MFS vs MFJ for CA, the tax comes out higher.  The non-resident spouse has no CA income and doesn't (and hasn't) live in CA.  The CA tax seems several thousand dollars higher than it should be for just the resident spouse income.  Joan, KC, Tom, anybody . . . is there something I'm missing?  Income for resident spouse is only W2 income plus a little interest.  Standard Schedule A deductions.  I have read the publication, and my clients have a pre-nup agreeing to keep property separate (not community property) - maybe I'm missing something in indicating this on the CA return?

Thanks much for any help anyone can provide.

[jasdlm]

Bump

[Max W]

The best way to check this out is to refer to the CA tax tables.  If it is over $100K, you have to use formulas.

https://www.ftb.ca.gov/forms/2015/15_540tt.pdf

 

[joanmcq]

CA doesn't have any type of penalty for MFS vs single, but I don't have a tax table in front of me to look at MFS /single vs MFJ. 

If they have a separate property agreement in place, there isn't any CP allocations. Can you give us some numbers?

[jasdlm]

Thanks so much to both of you for responding!  $320,000 CA source income.  $2,500,000 Non-Resident, non-CA source income.  $75,000 of the non-resident income is investment income; remainder is W2.  All CA Source income is W2.

Again, thanks so much!  I really appreciate it.  I know everyone has plenty to do without my problem.

[BulldogTom]

What is the non-resident state?  What is the date they married?  Is all of that 2015 income from the time they were married?

I think you have to file the same status for CA as you did for Fed.  I know there is an exception for non-resident who was not in the state all year, but I think that depends on whether or not that state is Community Property State or not.  If they were married all year, and both states are CP, I think that income will be split 50/50 and it will be subject to CA taxation for the non-resident portion that is deemed to be 50% of the resident's income.  I think the pre-nup will only apply to the property that they brought into the marriage, not the income earned by the couple during the marriage.  I think the CP laws of the state overrule the pre-nup.

In any case, you will be filing the 540NR and the adjustments will be made on the 540 CA NR to get the correct taxable income.  I have never done one quite like this.  It would take me some time to figure it out.

Tom
Newark, CA

[joanmcq]

They have a separate property agreement.  So no 50/50 split.