When married taxpayers file separate Arizona income tax returns, both filers must either claim the standard deduction or itemize deductions. One spouse may not claim a standard deduction when the other spouse itemizes deductions. If this situation does occur, the standard deduction will be disallowed regardless of which return may have been filed first. The treatment of itemized deductions by spouses who file separate returns depends on whether the deductible expenses were paid with community funds or with separate funds. If the expenses were paid with community funds, the deduction is divided equally between each spouse.
Expenses paid with separate funds are deductible by the spouse who paid the expenses.
Under no circumstances may more than 100 percent of the allowable deductions be claimed. When married taxpayers file separate Arizona returns and there is a dependent supported solely from the separate funds of one spouse, the dependent exemption may be claimed only by the spouse who provided the support. However, if the dependent is supported from community funds, the dependent exemption may be claimed by either taxpayer but cannot be divided. If there are two or more dependents supported from community funds, the taxpayers may divide the number of dependents taken on either return as they choose. Husband and wife support one dependent from community funds and file separate Arizona income tax returns.