Rules for marital status and community property income

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Deisy Martinez, a married taxpayer and a new client, met with you last week to discuss her 2012 tax return. In previous years, she has filed her tax returns as "single" because she and her husband are separated and do not live together. Ms. Martinez, a sole proprietor, earned $100,000 during the year from her business. On the other hand, her husband earned $40,000 as a teacher. They did not have any other income in 2012, and they did not transfer any funds to each other. After the meeting, you question whether "single" is the proper filing status for Ms. Martinez. Since she and her husband live in Texas, you are also not sure whether they should split their community property income. Ms. Martinez does not have any children.

What is Deisy Martinez's filing status for 2012? Should she and her husband split their community property income on their individual returns? Research these issues and write a letter to Ms. Martinez with your conclusions. In your letter, you should explain the rules for marital status and community property income. Her address is 500 Elizabeth Street, Brownsville, Texas 78520.

Could you please give me the answer and also provide the citations as to where they are.

Reference no: EM1310896

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