Year Community Property Status Ends
If a married couple divorces, separates, or gets an annulment, there are certain rules that apply to taxes in community property states.
Tax liability for a tax year in which community status ends may be in part due from community income and in part due from separate income (earned in that tax year, e.g., after the marital community ended). In all states the marital community ends when there is a final divorce decree or annulment.
In other situations, such as when there is a separation agreement or a court issues a decree of legal separation or separate maintenance, the end of the marital community depends on state law. For example, in some states, including California, the community may end when the spouses permanently separate, even if there is no written separation agreement.
“ Jim and Jen, California residents, separated on 06/30; their final divorce decree was 10/31. Jim worked as a hospital administrator for the entire tax year. Jen began working in a bank on 08/01. The couple had the following income for the tax year: ”
- Example - Income Allocation in Year Community Ends
| Wages | Jan - June | July - Oct | Nov - Dec | |
| Jim | 100,000 | $47,000 | $40,000 | $13,000 |
| Jen | 23,000 | 13,800 | 9,200 | |
| Joint Bank Account Interest | $100 | $50 | $0 | |
| Reportable Income: | Jim | Jen | ||
| Wages (Jan - June) | $23,500 | $23,500 | ||
| Wages (July-Oct) | 40,000 | 13,800 | ||
| Wages (Nov-Dec) | 13,000 | 9,200 | ||
| Interest (Jan-June) | $50 | $50 | ||
| Interest (July-Oct) | $25 | $25 | ||
| Total | $76,575 | $46,575 |
Note: Withholding taxes on the income would be allocated in the same manner as the income.
Filing Status
Filing status is
determined as of December 31 of the tax year. If the couple is still legally
married as of that date, neither can file using the single status. While they
are still legally married they will need to file either a joint return or two
married separate status returns, unless either or both qualifies for the head
of household status as explained above.