Unemployment Compensation in California – Community Property Split

From Spidell

If a married couple’s combined AGI (calculated without any UI compensation) is below $150,000, then MFJ taxpayers may exclude up to $20,400 of unemployment income even if one of the spouses had less than $10,200 in UI and the other spouse had more than $10,200. That is because California is a community property state and the Tax Court has recognized that UI is treated as community property. (Calhoun v. Commissioner (1992) 64 TC 222) However, your tax software may not properly split this income, and could improperly limit the exclusion if one spouse received less than $10,200. Tax professionals need to watch out for this and apply a manual override in this situation.

Married taxpayers with AGI above the $150,000 may file MFS to bring their AGI below the limit, which allows them to each claim up to the $10,200 maximum exclusion. …

Note – I would add that you need to talk to a qualified tax professional before you change your filing status to married filing separately because there are a lot of other consequences to doing this, such as a large increase in Medicare premiums

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