Calculating Income for Separate Tax Return
Lee and Pat's Tax Situation
Lee and Pat are married taxpayers living in Louisiana. Lee earns wages of $40,000 and has $5,000 of dividend income from separate property. Lee and Pat also have interest income from community property of $10,000.
Calculating Lee's Separate Tax Return Income
When Lee and Pat file separate income tax returns, the amount of income that must be included on Lee's separate tax return can be calculated as follows:
Wages earned by Lee = $40,000
Dividend income from separate property = $5,000
Interest income from community property = $10,000
Now, the amount of income that must be included on Lee's separate tax return:
= 50% of [Wages earned + Dividend income + Interest income]
= 0.50 × ($40,000 + $5,000 + $10,000)
= 0.50 × $55,000
= $27,500
If Lee and Pat file separate income tax returns, what amount of income must be included on Lee's separate tax return? $27,500