Foreign Tax Credit & Community Property

nquery · Post by **nquery** » Mon Mar 04, 2013 1:32 pm

Hi,

I have googled this one to death and can't find a thing on this topic ... so wondering if one of you smart guys knows the answer.

I immigrated to the US in 2012, married to USC spouse. I have run the numbers using both MFJ and MFS and MFS appears to be much better $ wise. However, the problem with MFS is that I live in Washington, a community property state. So all income while domiciled there has to be split 50/50 on our separate returns. Both my spouse and I have some canadian sourced income after I immigrated. Some of the income is earned, some is not (Maternity benefits). I can't FEIE because I was not domiciled in Canada for the earned income and it doesn't apply to unearned income anyways.

I can split our income easily enough, but I cannot find a single reference on how to treat the foreign tax credit. Normally, stateside, one would split the W2 income and also split any deductions. So my line of logic is that the foreign tax should be split accordingly and moved to the other spouses 1116 and vica versa?

I am guessing everyone will suggest seeing a tax expert but hoping otherwise ...

nquery · Post by **nquery** » Wed Mar 06, 2013 3:43 pm

As a followup, I talked to the 'advanced tax law' section at the IRS and they are doing some research and getting back to me. Seems strange that no one has an answer given that there must *some* people out there who live in a community property state, file MFS, and have foreign unearned income. I think I am just going to itemize these grey area incomes as separate incomes (not community) and attribute 100% fully to the originating person.