Irs Publication 555 - Community Property Page 12
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17Example
next) is prepared to figure their federal income tax both
ways. Walter and Mary must claim their own exemptions
Walter and Mary Smith are married and domiciled in a
on their separate returns.
community property state. Their two children (18-year-old
The summary at the bottom of the worksheet compares
twins) and Mary’s mother live with them and qualify as their
the tax figured on the Smiths’ joint return to the total tax
dependents. Amounts paid for their support were paid out
figured by adding the tax amounts on their separate re-
of community funds.
turns. By filing separately under the community property
Walter received a salary of $65,424. Income tax with-
laws of their state, the Smiths save $289 in income tax.
held from his salary was $6,356. Walter received $132 in
If the Smiths were domiciled in Idaho, Louisiana, Texas,
taxable interest from his savings account. He also received
or Wisconsin, the result would be slightly different because
$217 in dividends from stock that he owned. His interest
in those states income from separate property generally is
and dividend income are his separate income under the
treated as community income. If they lived in one of those
laws of his community property state.
states, the interest from Walter’s savings account and the
Mary received $200 in dividends from stock that she
dividends from stock owned by each of them would be
owned. This is her separate income. In addition, she re-
divided equally on their separate returns.
ceived $13,400 as a part-time dental technician. Income
In figuring your tax, use the amounts from your
tax withheld from her salary was $1,352.
!
current tax forms instruction booklet for items
The Smiths paid a total of $7,775 in medical expenses.
such as the standard deduction, exemption allow-
CAUTION
Medical insurance of $2,050 was paid out of community
ance, and Tax Table tax. The amounts used in this exam-
funds. Walter paid $5,725 out of his separate funds for an
ple apply for 2011 only. The example shows how filing
operation he had.
separate returns under community property tax laws can
The Smiths had $10,264 in other itemized deductions,
result in lower tax than filing jointly; you must figure your
none of which were miscellaneous itemized deductions
own tax both ways to know which works better for you.
subject to the 2%-of-adjusted-gross-income limit. The
amounts spent for these deductions were paid out of com-
munity funds.
To see if it is to the Smiths’ advantage to file a joint
return or separate returns, a worksheet (Table 3, shown
Page 12
Publication 555 (March 2012)
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