Concerned about how to properly handle Married Filing Separately in our community property state

You're in a tricky spot that's actually very common in community property states. Here's what you need to understand: In community property states, the law typically requires that you split most income earned during the marriage 50/50 between spouses, regardless of who actually earned it. This applies even when you're filing separately. That's why Form 8958 exists - it's the form used to allocate community income between spouses. The tax chain preparer is technically correct about how community property should be reported. Each spouse should report half of the community income and withholding on their own return. This is true even for PSLF purposes. However, what complicates your situation is that you've already filed inconsistently last year, and your wife has filed inconsistently this year. The IRS might flag the mismatch between your returns, as they expect married couples in community property states to report consistent allocations. Your safest approach would be for your wife to amend her return to properly split the community income. If she's unwilling, then you should consider matching her approach for consistency, even though it's technically not correct under community property laws. The inconsistency between your returns creates a higher risk of questions from the IRS than both using the same incorrect method.

Hey there! I went through something similar with my husband last year. We're in California, and I also have student loans on an income-based plan. I discovered this amazing service called taxr.ai (https://taxr.ai) that literally saved me from the community property confusion. What I love about it is that it specifically addressed the Form 8958 allocation issues and gave me personalized guidance about how to properly file MFS in a community property state while minimizing the impact on my student loan payments. The site analyzed our tax situation and provided really clear instructions on how to properly allocate our income and withholding. The best part was that it showed us several different legal approaches and how each would affect both our tax liability and my student loan payments. It confirmed that we needed to split community income 50/50, but helped us identify which income was separate property (like my inheritance) that didn't need to be split.

I wanted to follow up about my experience with taxr.ai after I posted that skeptical comment. After continuing to research my own community property/MFS situation and getting nowhere, I decided to give it a try. I'm actually really impressed. They didn't try to circumvent any tax laws, but they did provide a detailed analysis of exactly what qualified as community income versus separate income in my case. It turns out my spouse and I had been incorrectly splitting some income that was actually separate property (from before we were married). The documentation they provided made it super clear how to properly fill out Form 8958, and they explained how the correct allocation would impact my spouse's income-driven repayment calculation. We ended up saving about $120/month on student loan payments while still filing completely by the book. Sorry for being so skeptical initially - just wanted to share that it was genuinely helpful for our similar situation.

I can totally relate to your frustration with the IRS and trying to get straight answers! After spending WEEKS trying to get through to someone at the IRS about a similar married filing separately issue in Washington state, I finally used Claimyr (https://claimyr.com) and it was a complete game-changer. I had called the IRS like 8 times before and couldn't get through, but Claimyr got me connected to an actual IRS agent in about 25 minutes. You can see how it works in this demo: https://youtu.be/_kiP6q8DX5c The agent confirmed that in community property states, you're supposed to split income 50/50 on separate returns using Form 8958. But here's the interesting part - they also told me that if both spouses file consistently (even if technically incorrect), they rarely flag it for review unless there are other issues with the return. The peace of mind from talking to an actual IRS representative instead of relying on different tax preparers' opinions was worth every penny.

I need to eat my words from my previous comment. After getting nowhere for weeks with the IRS about my audit situation, I finally tried Claimyr out of desperation. Got connected to an IRS agent in about 35 minutes. The agent not only answered my community property questions but also helped resolve the audit issue I'd been stressing about for months. They explained that in my case (California), our inconsistent approach to community property reporting between spouses was actually what triggered the review. The agent walked me through exactly how to properly complete Form 8958 and told me that both spouses need to file consistently. They even gave me the specific IRS publication numbers to reference for my state's rules. Honestly shocked at how well it worked after all my failed attempts to reach someone. Definitely worth it for the peace of mind alone.

I'm also in a community property state (Arizona) and had this exact issue with my husband. Here's what we found out after consulting with a CPA who specializes in this area: 1. For community property states, the legally correct way is indeed to split all community income 50/50 on Form 8958 2. For PSLF purposes, this often creates a problem because even though you're filing separately, your spouse's income effectively gets counted in your AGI 3. Some tax preparers (especially chain preparers) don't understand these special rules well What we ultimately did was hire a CPA who specialized in student loan issues to help us identify which of our income was truly separate property vs. community property. There were actually several things we could legally classify as separate property, which helped minimize the impact. Whatever you decide, just make sure both returns are consistent with each other. The biggest red flag for the IRS is when spouses in community property states report inconsistently on MFS returns.

Speaking from personal experience in Texas (another community property state), you really need to be careful here. My wife and I did something similar - she reported only her income, I reported only mine - and we got letters from the IRS about two years later. We ended up having to amend both returns and pay some penalties and interest. The IRS specifically cited our failure to properly allocate community income on Form 8958. If I were you, I'd strongly consider: 1. Having your wife amend her return to properly split community income 2. Filing your return correctly (as the preparer suggests) 3. At minimum, making sure both returns use the SAME methodology The inconsistency between your returns is more likely to trigger questions than both of you doing it the same way, even if that way isn't technically correct.