CreditMyDebit wrote:Disagree with makbo on only applying to MFS.
Yes, but since it's all reported on a single return when filing MFJ, it's not "split". Income splitting in this context usually refers to splitting income across two different returns.
If wife is full year CA resident, and husband is full-year domiciliary resident of a foreign country which has community property law (which we don't know from the OP), then half of her income is CA source income to him (but it doesn't get split, it's already included in the MFJ return). And half of his foreign-source income belongs to her, which as a CA resident, she will be taxed on (worldwide income). But again, since
all of his income is already recorded on the MFJ return, it's not really "split", but I can see calling it that. It's not until the last column of Schedule CA(540NR) that a determination is made whether or not the income is taxable to CA. Any income that belongs to her will be taxed (worldwide income is taxable for CA resident), but only his portion of CA source income will be taxed. The foreign jurisdiction might also want to tax her on her foreign-source share of his income, and CA has no foreign tax credit, so tough luck there unless the foreign jurisdiction has a tax credit for tax paid to CA.
CreditMyDebit wrote:Where is the husband claiming residency? Does the foreign country have community property marriage laws? You may need to report half of husbands income.
No, you must report
all the husband's income, but only half of it (if he is domiciled in a comm. prop. jurisdiction) or none of it (otherwise) is taxable to CA.