Irs Publication 555 - Community Property (Page 9 of 17) in pdf

of Property Acquired From a Decedent Dying in 2010, for

2. You cannot take the credit for child and dependent

additional information.

care expenses in most instances,

3. You cannot take the earned income credit,

Divorce or separation. If spouses divorce or separate,

4. You cannot exclude any interest income from quali-

the (equal or unequal) division of community property in

fied U.S. savings bonds that you used for higher

connection with the divorce or property settlement does

not result in a gain or loss (this rule does not apply to RDPs

education expenses,

or same-sex married couples in California). For informa-

5. You cannot take the credit for the elderly or the

tion on the tax consequences of the division of property

disabled unless you lived apart from your spouse all

under a property settlement or divorce decree, see Publi-

year,

cation 504.

6. You may have to include in income more of any

Each spouse (or RDP/California same-sex spouse) is

taxed on half the community income for the part of the year

social security benefits (including any equivalent rail-

before the community ends. However, see

Spouses living

road retirement benefits) you received during the

apart all

year, earlier. Any income received after the com-

year than you would on a joint return,

munity ends is separate income. This separate income is

7. You cannot deduct interest paid on a qualified stu-

taxable only to the spouse (or RDP/California same-sex

dent loan,

spouse) to whom it belongs.

An absolute decree of divorce or annulment ends the

8. You cannot take the education credits,

marital community in all community property states. A

9. You may have a smaller child tax credit than you

decree of annulment, even though it holds that no valid

would on a joint return, and

marriage ever existed, usually does not nullify community

property rights arising during the “marriage.” However, you

10. You cannot take the exclusion or credit for adoption

should check your state law for exceptions.

expenses in most instances.

A decree of legal separation or of separate mainte-

nance may or may not end the marital community. The

Figure your tax both on a joint return and on

court issuing the decree may terminate the marital commu-

separate returns under the community property

TIP

nity and divide the property between the spouses.

laws of your state. You can then compare the tax

figured under both methods and use the one that results in

A separation agreement may divide the community

property between you and your spouse. It may provide that

less tax.

this property, along with future earnings and property ac-

quired, will be separate property. This agreement may end

Separate Return Preparation

the community.

In some states, the marital community ends when the

If you file separate returns, you and your spouse must

spouses permanently separate, even if there is no formal

each report half of your combined community income and

agreement. Check your state law.

deductions in addition to your separate income and deduc-

If you are a RDP or an individual married to a same-sex

tions. List only your share of the income and deductions on

individual in California, you should check your state law to

the appropriate lines of your separate tax returns (wages,

determine when the community ends.

interest, dividends, etc.). The same reporting rule applies

to RDPs and individuals in California who are married to an

individual of the same sex. For a discussion of the effect of

Preparing a Federal Income

community property laws on certain items of income, de-

ductions, credits, and other return amounts, see

Identifying

Tax Return

Income, Deductions, and

Credits, earlier.

Attach a worksheet to your separate returns showing

The following discussion does not apply to spouses who

how you figured the income, deductions, and federal in-

meet the conditions under

Spouses living apart all

year,

come tax withheld that each of you reported. The Alloca-

discussed earlier. Those spouses must report their com-

tion Worksheet (Table 2) shown later can be used for this

munity income as explained in that discussion.

purpose. If you are a RDP or an individual in California

married to an individual of the same sex, you may want to

Joint Return Versus Separate Returns

write the social security number of your partner or

same-sex spouse in the “Notes” section of the worksheet

Ordinarily, filing a joint return will give you a greater tax

to avoid delays in the processing of your return. If you do

advantage than filing a separate return. But in some cases,

not attach a worksheet, you and your spouse (or RDP/

your combined income tax on separate returns may be

California same-sex spouse) should each attach a photo-

less than it would be on a joint return.

copy of the other spouse’s (or RDP’s/California same-sex

The following rules apply if your filing status is married

spouse’s) Form W-2, Wage and Tax Statement, or

filing separately.

1099-R, Distributions From Pensions, Retirement or

Profit-Sharing Plans, IRAs, Insurance Contracts, etc.

1. You should itemize deductions if your spouse item-

izes deductions, because you cannot claim the stan-

Make a notation on the form showing the division of in-

dard deduction,

come and tax withheld.

Publication 555 (March 2012)

Page 9

Irs Publication 555 - Community Property Page 9

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