Irs Publication 555 - Community Property (Page 7 of 17) in pdf

as belonging to you under community property laws. That

3. The item of community income you did not include is

amount is not earned income for the EIC, even though you

one of the following:

must include it in your gross income on your income tax

a. Wages, salaries, and other compensation your

return. Your earned income includes the entire amount

spouse (or former spouse) received for services

you earned, even if part of it is treated as belonging to your

he or she performed as an employee.

spouse under your state’s community property laws. The

same rule applies to RDPs and same-sex spouses in

b. Income your spouse (or former spouse) derived

California.

from a trade or business he or she operated as a

This rule does not apply when determining your

sole proprietor.

adjusted gross income (AGI) for the EIC. Your

c. Your spouse’s (or former spouse’s) distributive

AGI includes that part of both your and your

CAUTION

share of partnership income.

spouse’s (or RDP’s/California same-sex spouse’s) wages

that you are required to include in gross income shown on

d. Income from your spouse’s (or former spouse’s)

your tax return.

separate property (other than income described in

(a), (b), or (c)). Use the appropriate community

For more information about the EIC, see Publication

596, Earned Income Credit (EIC).

property law to determine what is separate prop-

erty.

Overpayments. The amount of an overpayment on a joint

e. Any other income that belongs to your spouse (or

return is allocated under the community property laws of

former spouse) under community property law.

the state in which you are domiciled.

•

If, under the laws of your state, community property

4. You establish that you did not know of, and had no

is subject to premarital or other separate debts of

reason to know of, that community income.

either spouse, the full joint overpayment may be

5. Under all facts and circumstances, it would not be

used to offset the obligation.

fair to include the item of community income in your

•

If, under the laws of your state, community property

gross income.

is not subject to premarital or other separate debts of

either spouse, only the portion of the joint overpay-

Requesting relief. For information on how and when to

ment allocated to the spouse liable for the obligation

request relief from liabilities arising from community prop-

can be used to offset that liability. The portion allo-

erty laws, see Community Property Laws in Publication

cated to the other spouse can be refunded.

971, Innocent Spouse Relief.

Equitable relief. If you do not qualify for the relief dis-

cussed earlier under

Relief from liability arising from com-

Community Property Laws

munity property law

and are now liable for an underpaid or

Disregarded

understated tax you believe should be paid only by your

spouse (or former spouse), you may request equitable

relief. To request equitable relief, you must file Form 8857,

The following discussions are situations where special

Request for Innocent Spouse Relief. Also see Publication

rules apply to community property and community income

971.

for spouses. These rules do not apply to RDPs (or Califor-

nia same-sex spouses).

Spousal agreements. In some states a husband and wife

Certain community income not treated as community

may enter into an agreement that affects the status of

income by one spouse. Community property laws may

property or income as community or separate property.

not apply to an item of community income that you re-

Check your state law to determine how it affects you.

ceived but did not treat as community income. You are

responsible for reporting all of that income item if:

Nonresident alien spouse. If you are a United States

1. You treat the item as if only you are entitled to the

citizen or resident alien and you choose to treat your

income, and

nonresident alien spouse as a U.S. resident for tax pur-

poses and you are domiciled in a community property state

2. You do not notify your spouse of the nature and

or country, use the community property rules. You must file

amount of the income by the due date for filing the

a joint return for the year you make the choice. You can file

return (including extensions).

separate returns in later years. For details on making this

choice, see Publication 519, U.S. Tax Guide for Aliens.

Relief from liability arising from community property

law. You are not responsible for the tax relating to an item

If you are a U.S. citizen or resident alien and do not

of community income if all the following conditions exist.

choose to treat your nonresident alien spouse as a U.S.

resident for tax purposes, treat your community income as

1. You did not file a joint return for the tax year.

explained next under Spouses living apart all year. How-

ever, you do not have to meet the four conditions dis-

2. You did not include an item of community income in

cussed there.

gross income.

Publication 555 (March 2012)

Page 7

Irs Publication 555 - Community Property Page 7

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