miorelli (12/16/82)
DETERMINING SEPARATE TAXABLE INCOME IN A BASE YEAR FOR INCOME
(Common-Law States)
Ownership of income is determined by state law. The laws regarding the
ownership of income and property in most states follow British common law.
These states are called common law states (this chart). In these states
the income belongs to the person who earned it or who owned the property
that produced the income.
The laws of eight states follow French & Spanish civil law. These states
are called community property states. In general in these states income
for services(labor) performed received by a married couple is considered
to belong half to the husband and half to the wife regardless of which of
them earned it. The laws regarding the ownership of property vary among
these states. The eight community property states are Arizona, California,
Idaho, Louisiana, Nevada, New Mexico, Texas, and Washington. For
purposes of income averaging and separate income from a different spouse
in a base year, each spouse would claim half the income that was
claimed on a joint return.
def: AGI - Adjusted Gross Income (last line on the 1st page of the 1040)
Use this chart if you were married in a base period year and are not filing
jointly with that spouse in the computation year. This chart applies to
EACH base period year. The income used on this year's Sch G is the
sum of each spouses' separate income for the given year. If married for
the first time it is the sum of your separate incomes for the base years.
If married filing jointly with the same spouse it is the income you
reported jointly in each base year.
+----------------------+
No | Did you file jointly | Yes
+---------------| in the base year? |-----------------+
| +----------------------+ |
| |
V V
+-----------------------+ +-------------------------+
| Your separate taxable | | You must compute your |
| income for the base | | separate taxable income |
| year is the taxable | +-------------------------+
| income computed on | |
| your separate return | V
+-----------------------+ +-------------------------+
| No | Was your AGI over half |
| +-----------------| of the combined income |
V | | of you and your spouse? |
+-----------------------+ | +-------------------------+
| Is your separate AGI | | | Yes
| greater than half of | No | |
| the combined AGI of |-----+ | V
| you and your spouse? | | | +-------------------------+
+-----------------------+ | | | Was your AGI 85% or more|
| Yes | | No | of the combined AGI of |
| | | +-------| you and your spouse? |
| | | | +-------------------------+
| | | | | Yes
| | | | |
V V V V V
+-----------------+ +----------------+ +------------------+ +-----------------+
|Use your separate| |Use half the | |Use your separate | |Use your separate|
|taxable income as| |combined taxable| |taxable income, | |taxable income, |
|reported on your | |income of you & | |which equals your | |which equals your|
|separate return | |your spouse in | |AGI less same % of| |AGI less total |
| | |the base year | |deductions and | |deductions and |
| | | | |exemptions | |exemptions |
+-----------------+ +----------------+ +------------------+ +-----------------+