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California Tax Board: 01 1051a

California Tax Board: 01 1051a

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Published by: Taxman on Jan 22, 2008
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06/14/2009

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FTB Pub. 1051A
(REV 10-2001)
Side 1
State of California Franchise Tax BoardFTB Pub. 1051A
Guidelines for Married Filing Separate Returns
References in this publication are to the California Revenue and Taxation Code (R&TC).
General
For federal income tax purposes, marriedtaxpayers may file either as married filing jointor married filing separate.Generally, it is to your advantage to filemarried filing joint, especially, if you aredomiciled in a community property state suchas California.California requires that you use the samefiling status on your California return that youused on your federal return. There are twoexceptions to this requirement:
if either spouse was an active member ofthe United States armed forces (or anauxiliary military branch) during the taxyear, or
if either spouse was a nonresident for theentire year and had no income fromCalifornia sources during the tax year. (SeeFTB Pub. 1031.)
Note:
If the spouse with California sourceincome is domiciled in a community propertystate, the above nonresident spouse exceptionmay
not
be used unless the income isseparate income.If you filed married filing separate for federalor meet one of the above exceptions, you mayfile married filing separate for California.
Changing Filing Status
If a valid joint return is filed, the filing statusmay not be changed to separate after theoriginal due date of the return.Exceptions:
The marriage was annulled;
The joint return was actually not valid,because the taxpayers were not married;or
The executor or administrator of adecedent disaffirmed the joint returnelected by the surviving spouse and filed aseparate return for the decedent. Thechange must have been made within oneyear from the due date of the survivingspouse’s return.
For tax years beginning 1/1/2000: if eitherspouse was an active member of theUnited States armed forces (or an auxiliarymilitary branch) during the tax year, or
if either spouse was a nonresident for theentire year and had no income fromCalifornia sources during the tax year. (SeeFTB Pub. 1031.)
Note:
If the spouse with California sourceincome is domiciled in a community propertystate, the above nonresident spouse exceptionmay
not
be used unless the income isseparate income.If separate returns are filed, an amendedreturn changing the filing status to marriedfiling joint may be filed so long as the filingstatus of the federal return is also marriedfiling joint.Exceptions: A joint return may not be filed:
After either spouse has been issued aNotice of Proposed Assessment (PA) forthe taxable year and the spouse filed aprotest or appeal.
After either spouse has filed a suit in anycourt for recovery of tax for the taxableyear.
After either spouse has entered into aclosing agreement under R&TC Sec-tion19441 for the taxable year.
Filing a Separate Return
If you do file married filing separate, you mustfollow the community property rules for thedivision of income and deductions.You and your spouse must each report half ofthe community income, plus your separateincome on your respective separate returns.
Community Property
Community property is all of the propertyacquired by a husband or wife or both whiledomiciled in a community property state thatis not separate property, as defined below.Each spouse owns one-half of all communityproperty. If property cannot be specificallyidentified as separate property, it is consid-ered community property.
Community Income
Income generated from community propertyis community income. Community incomealso includes compensation for services if thespouse earning the compensation is domi-ciled in a community property state.Community income must be divided equallybetween you and your spouse when separatereturns are filed.
Note:
In California, community status, relativeto earnings and accumulations of property,ends when the marital partners physicallyseparate with no immediate intention ofreconciliation. The income earned after thecommunity status ends is separate income.
Separate Property
Separate property is:
property owned separately by the husbandor wife before marriage;
property received separately as gifts orinheritances;
property purchased with separate propertyfunds;
money earned while domiciled in aseparate property state; and
all property declared separate property in avalid agreement (pre- or post-nuptialagreement).Separate property must be maintainedseparately. If the property or the income fromthe property is used for community purposes,or commingled, it could lose its separateproperty character, overriding any agree-ments.
Separate Income
Generally, income from separate property isincome of the spouse who owns the property.When separate returns are filed, you and yourspouse must each report your separateincome on your separate return.
Deductions
Expenses incurred to earn or producecommunity business or investment incomeare generally divided equally between you andyour spouse. Each of you is entitled to deducthalf of the expenses of the business orinvestment expenses on your separate return.Expenses incurred to earn or produceseparate business or investment income aredeductible by the spouse who owns theinvestment generating the income, providedthat spouse pays the expenses from his or herseparate funds.Expenses that are not attributable to anyspecific income, such as medical expenses,are deductible by the spouse who pays them.If these expenses are paid from communityfunds, the deduction is divided equallybetween you and your spouse.
Note:
If one spouse itemizes deductions, youboth must itemize deductions.
Division of Income, Residentsof California – Examples
Example 1 –
In 2001 you and your spouse areresidents of and domiciled in California. Youearned $15,000 in wages. Your spouse earned$30,000. In addition to wages, you have stockthat you inherited. The stock is in your nameonly, and you keep the stock and the dividendincome separate from community funds. Youreceived $5,000 in dividends in 2001. Youhave decided to file separate returns.
Determination:
You and your spouse eachhave $22,500 in community income:($15,000+$30,000 = $45,000 ÷ 2). Inaddition to your $22,500 in communityincome to be reported, you must include the$5,000 of separate income from dividends,making your total income $27,500.
Example 2 –
In 2001, you and your spouseare residents of and domiciled in California.For the first six months of 2001 you earned$30,000. Your spouse did not earn anyincome. On June 30, 2001, you and your

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