Instruction:
What is the best way to file California State Tax for Spouse Abroad in community property jurisdiction countries like China? The goal is to minimize the tax for community property income.

Response:
For resident spouse in California (CA) and non-resident spouse living and working in China, you can file Federal tax jointly and California state tax separately to minimize the community property income. But since both the California state and China are community property jurisdiction, only 50% of the non-resident spouse's income can be exempt from CA state tax, i.e. 100% of the resident spouse's California source income needs to be filed (50% in resident's form 540, and another 50% in non-resident's form 540NR), and 50% of non-resident spouse's foreign income needs to be filed in resident's Form 540. 

Note that Foreign Tax Credit or Exemption cannot be applied to state tax like federal tax.