Situation: spouse (wife) domiciling (and residing all year) in Arizona (Community Property State), husband domiciling (and residing all year) in non-CPS. Couple wants to file federal tax return as "Married Filing Separately".
Question: What income does wife/husband have to report on Federal Taxes.
If both domiciled in Arizona, both would have to report half of their total wages. Since husband domiciles in non-CPS, I see four possible scenarios:
(1) both have to report half of their total wages
(2) neither spouse's wages are considered community income, both report the entirety of their individual wages on their returns
(3) only wife's wages are considered community income, wife reports half of her wages, husband reports the entirety of his wages + half of wife's wages
(4) only husband's wages are considered community income, wife reports the entirety of her wages + half of husband's wages, husband reports half of his wages
The IRS website under 220.127.116.11.1 paragraph 5. states:
If, for example, one spouse domiciles in a community property state and the other in a common law state, the wages of the spouse residing in the community property state would be community property, but those of the other spouse would be separate property under the law of the other state
This seems to lend support to scenario (3) above, but I am not sure whether this is the ultimate reference to use here, so I kept searching. In another IRS document online, the definition of Community Income is given:
Salaries, wages, and other pay received for the services performed by you, your spouse (or your registered domestic partner), or both during your marriage (or registered domestic partnership) while domiciled in a community property state.
This is not entirely unambiguous to me either.