CA Taxpayers get a UI Exclusion Bump

[BulldogTom]

This just came in from Spidell.   CA (and other states that treat UI as community property) give an advantage to taxpayers.   Here is the quote from the article:

"If a married couple’s combined AGI (calculated without any UI compensation) is below $150,000, then MFJ taxpayers may exclude up to $20,400 of unemployment income even if one of the spouses had less than $10,200 in UI and the other spouse had more than $10,200. That is because California is a community property state and the Tax Court has recognized that UI is treated as community property. (Calhoun v. Commissioner (1992) 64 TC 222) However, your tax software may not properly split this income, and could improperly limit the exclusion if one spouse received less than $10,200. Tax professionals need to watch out for this and apply a manual override in this situation."

Tom
Modesto, CA

[BulldogTom]

IRS yesterday confirms that MFJ taxpayers in Community Property States are to split the UI equally between them and then apply the exclusion to each spouse, even if only one had UI.    Big break for taxpayers in Community Property States.

Tom
Modesto, CA

[Lee B]

One more time, I am sooo glad I am not in a community property state