My husband and I lived together in CA since 2005 and filed taxes jointly for the past 3 years. But we decided to be separated and he moved to Maryland at the end of Sep, 2008 and has worked there since. (I have lived and worked in CA all the year).

We decided to file taxes separately for 2008. But since CA is a community property state, both of us must combine our total income, and divide that income in half.

But does the total income include his income in MD (which is not a community property state) too? How about bank interest of each other’s accounts?

We don’t have kids or own houses. The only income is his salary in CA for 9 months, 3 months in MD and bank interest, & my salary for 12 months in CA and bank interest.

I understand for federal taxes, we could file a separate return to report only his or my own income, correct?

Thanks in advance.

California has NO legal standing to tax MD income once your husband changed residency to MD, so count ONLY his CA income. You pro-rate his interest and NOT count the three months he lived in MD.

As for the federal return, you only count YOUR income, not his.