If you and your partner are in a registered domestic partnership (RDP) and you reside in the community property states of California, Nevada, or Washington, you'll each need to prepare your own federal tax returns based on your state's community property rules.
You'll both report your share of community property income, which is determined by your state's tax laws and other factors like prenuptial agreements.
Before you begin, you and your partner will need to calculate your individual shares of the community property you own. IRS Publication 555 (page 3 in particular) has guidance on how to determine and properly split community income.
We’ve broken out the steps you need to take into four parts (the fourth is for CA residents only).
Part I: Do your federal return first
1) Start a return for yourself in TurboTax.
2) When you get to the Were You Married? screen, select In a Registered Domestic Partnership (RDP).
3) Enter your income, deductions, and other information as they were reported to, or incurred by, you.
4) When you get to the Community Property Income screen, answer Yes and continue.
5) On the Community Property Income Adjustments screen, enter the adjustment as determined by your state's rules.
- This is the amount that adjusts your actual income to your share of the community property. For example, let's say both partners' share of the community property income is $20,000 apiece and your actual income was $15,000. You'd enter a $5,000 addition to adjust your income to the community property amount of $20,000. (On your partner's return, they would enter a $5,000 subtraction; that'll come in Part II.)
- Use positive numbers for either adjustment.
- When finished, select Continue.
6) On the Tax Withholding Adjustments screen, enter the adjustment (if any) for any withheld taxes from your W-2s and 1099s as determined by your state's rules.
- Follow the same guidelines in Step 5, except tax withholding subtraction adjustment amounts should be preceded with a minus (-) sign.
- Don't include estimated tax payments here, they are considered separate property.
7) Enter your partner's information on the Registered Domestic Partnership Information screen and select Continue.
The next few screens all start with Community Property—for example, Community Property – Wages. On these screens, you'll want to:
- Verify the amounts in the You column.
- If they’re wrong, go back to the source to correct (for example, to correct your wage amount, go back to your W-2 and fix the amount there).
- Enter your partner's actual wages, interest, dividends, self-employment income, and/or miscellaneous items.
- Tip: Jot down the information on these screens or better yet, take screenshots. This will come in handy when you get to Part II.
- When you get to the Enter Your Partner or Spouse's Community Income screen, STOP. Write down the info in the You Reported column or take a screenshot.
Save your return and close it.
Part II: Prepare your partner's federal return
Follow steps 1 – 7 in Part I, except this time enter the information for your partner.
When you get to the Community Property Income Adjustments and Tax Withholding Adjustments screens, make sure your partner's additions or subtractions counterbalance the ones you entered on your return.
For example, if you entered a $3,000 community property addition adjustment on your return, your partner will need to have a $3,000 community property subtraction adjustment so that the numbers from both your returns zero out.
On the community property screens with the You and Partner/Spouse columns, your partner's info goes into the You column (because it's their return) and the info from your return goes into the Partner/Spouse column. This is where the screenshots you took in Part I will help.
When you get to the last screen, Enter Your Partner or Spouse's Community Income screen, the information in the You Reported column on your return goes into the Your Partner/Spouse Reported column on your partner's return.
When finished, reopen your return and proceed to the Enter Your Partner or Spouse's Community Income screen so you can enter the information from your partner's You Reported column into your own return's Your Partner/Spouse Reported column.
Part III: Finish and file both returns
On each return, go through the Review sections before moving on to the File section.
When you get to File, follow the instructions to file each federal tax return. IRS rules may prohibit community property returns from being e-filed in certain cases. That's OK, just follow the instructions to file a paper return and be sure to include a copy of the community property worksheet.
Part IV: (Optional) Prepare and file California return(s)
If you and your partner are filing separate California returns, the process is straightforward:
1) Open your returns and go to the Personal Info section.
2) Proceed to the Your Personal Info Summary screen and select the first Edit button.
3) Continue to the Registered Domestic Partnership screen and select the first option, This is a married return we will use to prepare our state return.
4) Then select the last option, We want to file married filing separately for this state and continue.
5) Enter your partner's information on the Spouse's Info screen.
6) (Optional) It wouldn't hurt to step through each federal return and run the Review again.
7) Move on to the State Taxes section and follow the instructions to prepare and file your separate California returns.
On the other hand, if you want to file your state return jointly, there are a few extra steps involved. You'll need to create a mock federal joint return which won't be filed with the IRS. Its only purpose is to transfer your combined information to your California return.
1) Recreate the return for the primary taxpayer (this is who you want listed first on your joint return). This will be your mock return.
2) In the mock return, go to the Personal Info section.
3) Proceed to the Your Personal Info Summary screen and select the first Edit button.
4) Continue to the Registered Domestic Partnership screen and select the first option, This is a married return we will use to prepare our state return.
- Then select the option, We want to file married filing jointly for this state and continue.
5) Enter your partner's information on the Spouse's Info screen.
6) Proceed through the mock federal return to add the other partner's income, deductions, credits, and other information.
7) Follow the instructions to prepare your joint state return in the State Taxes section.
8) When you get to the File section, select the File by mail option, (you won’t be able to e-file your state return).
9) On the next screen, Select The Returns You're Ready to File By Mail, select Do not print my federal return to file by mail now and continue.
10) Follow the instructions to print your state return for paper-filing.
You should print a copy of your mock federal return (along with your state return) for your records, but don't file the mock return with the IRS.