Form 8958: Allocation of Tax Amounts Between Certain Individuals in Community Property States
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Form 8958: Allocation of Tax Amounts Between Certain Individuals in Community Property States

Form 8958 is used to determine the allocation of tax amounts between married filing separate spouses and registered domestic partners due to community property rights. It is important to remember that community or separate income and deductions can depend on the laws of the state in which you are domiciled. The lead can help you understand the general effects of community property laws on federal income taxes.

What is Form 8958?

Form 8958 is used to determine the allocation of tax amounts between married filing separate spouses or registered domestic partners (RDPs) with community property rights. Generally, community income is income from salaries, wages, pay for services done during marriage or RDP, or real estate treated as community property under the laws of the state where the property is located. Interest, dividends, rents, and gains/losses from community property must be evenly split between spouses/RDPs, as well as withdrawals from individual retirement arrangements. Different rules apply for spouses living apart all year and for nonresident alien spouses. Deductible expenses are also dependent on whether the expenses are related to community or separate income, and in the case of self-employment tax, only spouses may split respective net incomes.

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IRS Form 8958 – Who Needs to Fill It Out?

To fill out Form 8958, individuals subject to community property laws who are filing separate federal income tax returns should use this form to determine the allocation of tax amounts between married filing separate spouses or registered domestic partners (RDPs) with community property rights. Income such as wages, self-employment income, interest, dividends, rents, and gains and losses classified as community or separate are all subject to special rules depending on whether the finances are community property or separate property of either spouse/RDP. Additionally, deductions such as business/investment expenses, IRA deductions, personal expenses, and self-employment tax may also need to be allocated according to applicable rules. Tax credits, taxes, and payments must also be considered in determining filing responsibilities.

Step-by-Step: Form 8958 Instructions For Filling Out the Document

Filling out the Form 8958 is a step-by-step process to determine the allocation of tax amounts between married filing separate spouses or registered domestic partners (RDPs) with community property rights. Begin by putting your name and social security number (SSN) at the top of the form. The form will then require you to identify community and separate income, deductions, credits, and other return amounts as required by the laws of your state. Wages and self-employment income from a sole proprietorship is community income and must be evenly split. Income from separate property is the separate income of the spouse or RDP who owns the property, while interest, dividends and rents from community property must also be evenly split. Special rules apply for spouses living apart all year and for spouses one or both of whom are nonresident aliens. Additionally, deductions such as business and investment expenses or the deductible portion of self-employment tax are to be split according to whether they involve community or separate income. Be sure to check for the latest information regarding Form 8958 at www.irs.gov/Form8958.

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Below, we present a table that will help you understand how to fill out Form 8958.

Information Required for Form 8958 Details
Steps to Complete Form 8958
  1. Enter your name and social security number (SSN) at the top of the form.
  2. Identify community and separate income, deductions, credits, and other return amounts as required by state laws.
  3. Special rules apply for certain situations like spouses living apart all year or nonresident aliens.
  4. Split deductions such as business and investment expenses according to community or separate income.
Additional Resources Check for the latest information regarding Form 8958 at www.irs.gov/Form8958.
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Do You Need to File Form 8958 Each Year?

Yes, if you need to determine the allocation of tax amounts between married filing separate spouses or Registered Domestic Partners (RDPs) with community property rights, you must use Form 8958 each year. This form is designed to identify community and separate income, deductions, credits, and other return amounts according to the laws of your state; it must also be able to accurately divide up income from separate property, wages and self-employment income from sole proprietorships, partnership income, interest, dividends, and rents, and distributions from individual retirement arrangements. Special rules apply for spouses living apart all year and for spouses (or RDPs) one or both of whom are nonresident aliens, and you must attach a statement listing the source of all items and their allocated amounts if there is not enough room to list them on the form.

Download the official IRS Form 8958 PDF

On the official IRS website, you will find a link to download Form 8958. However, to make it easier for you, we are providing the link in our article, which comes directly from the official irs.gov website! Click to download: Form 8958

Sources:

https://www.irs.gov/forms-pubs/about-form-8958

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