According to the IRS, if you file a Married Filing Joint return for a community property state, half of your unemployment and half of your spouse's unemployment income will be reported for each taxpayer.
If your joint modified AGI is less than $150,000, you and your spouse can exclude up to $10,200 each. You cannot exclude more than the amount of unemployment compensation reported for each taxpayer.
Both Taxpayers have Unemployment income:
Taxpayer A received $12,000 and Taxpayer B received $13,000. The taxpayer line of the Unemployment Exclusion Worksheet would have $12,500 as would the spouse's line ($12,000 X 50% + $13,000 X 50%). In our scenario, each taxpayer can exclude $10,200.
What if only one spouse received unemployment income?
Taxpayer A has Unemployment income in the amount of $20,000. The taxpayer line of the Unemployment Exclusion Worksheet would have $10,000 as would the spouse's line ($20,000 X 50% ). In our scenario, each taxpayer can exclude $10,000.
What if I filed Married Filing Separate?
Married filing separate taxpayers in a community property state are required to fill out Form 8958. Visit our Knowledgebase article for reporting instructions.