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Posted by Katie on April 26, 2008, 8:20 pm
Please log in for more thread options On Apr 20, 11:03 am, toner...@yahoo.com (tonervvc) wrote:
> Hi, everyone!
>
> My wife and I separated last year in August. She and her kids moved to be
> near her family in Oklahoma, while I remained in California. We were
> planning to divorce, but decided in Jan. 2008 to stay married, yet
> separated, while seeking counseling, etc., in the hopes of living together
> again a few years from now.
>
> She is a stay-at-home mother with no income of her own other than the
> monies I provide and some social security income her kids receive from
> their deceased father (she was a widow when I married her).
>
> My first question is this: We filed both our federal taxes an state taxes
> (CA only) jointly for 2007; I had all my income in CA and she resided more
> than 6 months with me in CA. Since she had no personal income in OK and
> only lived with relatives for those 4-5 remaining months of 2007, should I
> have also filed taxes in OK for 2007?
>
> Second question: Now that we are going to stay married yet remain apart
> while we work out our differences, we/I purchased a home (Feb 2008) for
> her in OK (paid cash-- only $15K!) in a rural area. She still has no
> other income other than her kids' social security, the money in our joint
> checking account, and student loans which she has just undertaken when she
> started back to school in Feb 2008 to finish her B.A. Will I need to file
> state taxes in both OK and CA this coming year(2008), splitting my income
> between the two states, if she will not be earning any pay this year in OK
> or elsewhere? Also, how would that change if she were to take on a
> part-time job in OK for some extra money (not that she plans to, but I am
> just covering my bases...)?
>
> I am a college professor in CA and gross over $100K per year and can
> afford to support our two separate households. Up to now, I have been
> able to file taxes on my own using tax software, but our separation may be
> putting things a little out of my league. Is it still manageable on my
> own, or do I really need to get someone else to do my taxes for
> protection? And by the way, we are just separated- not legally separated.
>
California law (Family Code Sec. 771) provides that current earnings
are separate (not community) income when spouses are living separate
and apart. The California courts have always interpreted this
provision (and its predecessor, Civil Code Sec. 5118) to apply only
when the parties have separated permanently, with no intention of
resuming the marital relationship. For example, property acquired by
a husband who shacked up with his girlfriend on his boat, but ate
dinner with his wife and children almost every night, paid his wife's
household bills, and had his wife do his laundry was held to be
community property (In re the Marriage of Baragry, CA-2, 73 Cal. App.
3d 444; 140 Cal. Rptr. 779; 1977 Cal. App. LEXIS 1860, September 19,
1977). Under the circumstances you describe, it appears your
California earnings are still community income. However, you may be
wise to seek legal advice on this question.
As I understand it your wife was visiting with friends and relatives
in OK in 2007, and her absence from California during that time may
have been temporary. If so, she remained a California resident during
her absence, and I presume that is the way you filed your 2007 joint
return -- as full year California residents.
Since she now has her own home in Oklahoma, she will be an Oklahoma
resident in 2008. Even if her domicile (her permanent home) remains
in California, she will be a statutory resident of Oklahoma if she is
present in the state for more than 7 months of the taxable year
( Okla. Stat. 68 §2353(4) ). As a result she will be subject to
Oklahoma tax on her community 1/2 of your earnings (YOU are still
domiciled in California; it doesn't matter whether she is), and also
on any earnings she may have in Oklahoma. Whether her Oklahoma
earnings are community income (hence half yours) depends on whether
her domicile actually changes to Oklahoma -- i.e., has she moved there
with the intention of remaining there permanently or indefinitely?
Since you remain in California, and your joint intention is to resume
the marital relationship at some point in the future, she may remain
domiciled in California. If so, your community 1/2 of her earnings
will be subject to California tax, since that income belongs to you, a
California resident. (Note the general principle here: the division
of earnings between spouses is determined by the laws of the state of
domicile of each of them. If your wife is domiciled in Oklahoma (a
common-law jurisdiction), or your separation is permanent, her
earnings are her separate income. If she is domiciled in California,
and your separation is not permanent, her earnings in Oklahoma are
community income.)
Of course both halves of your California earnings are subject to
California tax, because they are from a California source. Oklahoma
will give your wife credit for the California tax she pays on her
community 1/2 of your California earnings. Similarly, if her Oklahoma
earnings are community income, California will give you credit for the
tax you pay to Oklahoma on your community 1/2.
You and your wife should consult legal and tax advice for 2008,
because your situation is fairly complicated and the results may
differ depending on all of the facts and circumstances, and events
later in the year, that are not evident here.
Katie in San Diego
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