itonewbie
Level 15

Assuming you have fully assessed the domicile of both spouses, the wife's income since her relocation to GA was not community income but the wife continued to have TX-source community income from the husband through the end of the year.  This will mean that half of the husband's income during her residency in GA will be reportable on her GA return and taxable in GA - probably not what they are expecting.

You are correct that all of his income is from TX, NOT GA and that her income was all GA.  Nevertheless, that's not the issue.  Community property laws do not alter the sourcing of income but they do determine the division of income for tax purposes and, therefore, how the income would need to be reported and by whom.

If you are not familiar with how community property laws apply in the realm of taxation, you may like to refer to this publication: https://www.irs.gov/publications/p555

In the event you will be preparing MFJ for federal but MFS for GA, you will need to create a separate return just for GA because Lacerte can't handle a different filing status for GA.  Since GA is a piggyback state, that will probably mean that the GA return will need to be filed on paper.

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