Community Property Laws Disregarded: Taxes After Divorce or Separation (2025 IRS Guide)

This guide covers “Community Property Laws Disregarded” within taxes after divorce or separation. The following material presents the IRS treatment of this topic, including the qualifications, exceptions, and examples in the source section. Read the rules alongside the facts of your own situation before deciding what to report, deduct, or document.

Adapted from Publication 504 (2025), Divorced or Separated Individuals, published by the Internal Revenue Service. This guide retains the source edition’s years, amounts, deadlines, and examples. It is guidance for that edition, not a statement that the same figures apply to every tax year.

Context for these rules

If your domicile is in a community property state during any part of your tax year, you may have community income. Your state law determines whether your income is separate or community income. If you and your spouse file separate returns, you must report half of any income described by state law as community income and all of your separate income, and your spouse must report the other half of any community income plus all of their separate income. Each of you can claim credit for half the income tax withheld from community income.

Community Property Laws Disregarded

The following discussions are situations where special rules apply to community property.

Certain community income not treated as community income by one spouse.

Community property laws may not apply to an item of community income that you received but didn’t treat as community income. You will be responsible for reporting all of it if:

• You treat the item as if only you’re entitled to the income, and

• You don’t notify your spouse of the nature and amount of the income by the due date for filing the return (including extensions).

Relief from liability for tax attributable to an item of community income.

You aren’t responsible for the tax on an item of community income if all five of the following conditions exist.

1. You didn’t file a joint return for the tax year.

2. You didn’t include an item of community income in gross income on your separate return.

3. The item of community income you didn’t include is one of the following.

   1. Wages, salaries, and other compensation your spouse (or former spouse) received for services they performed as an employee.

   2. Income your spouse (or former spouse) derived from a trade or business they operated as a sole proprietor.

   3. Your spouse’s (or former spouse’s) distributive share of partnership income.

   4. Income from your spouse’s (or former spouse’s) separate property (other than income described in (a), (b), or (c)). Use the appropriate community property law to determine what is separate property.

   5. Any other income that belongs to your spouse (or former spouse) under community property law.

4. You establish that you didn’t know of, and had no reason to know of, that community income.

5. Under all facts and circumstances, it wouldn’t be fair to include the item of community income in your gross income.

Equitable relief from liability for tax attributable to an item of community income.

To be considered for equitable relief from liability for tax attributable to an item of community income, you must meet all of the following conditions.

1. You timely filed your claim for relief.

2. You and your spouse (or former spouse) didn’t transfer assets to one another as a part of a fraudulent scheme. A fraudulent scheme includes a scheme to defraud the IRS or another third party, such as a creditor, former spouse, or business partner.

3. Your spouse (or former spouse) didn’t transfer property to you for the main purpose of avoiding tax or the payment of tax.

4. You didn’t knowingly participate in the filing of a fraudulent joint return.

5. The income tax liability from which you seek relief is attributable (either in full or in part) to an item of your spouse (or former spouse) or an unpaid tax resulting from your spouse’s (or former spouse’s) income. If the liability is partially attributable to you, then relief can only be considered for the part of the liability attributable to your spouse (or former spouse). The IRS will consider granting relief regardless of whether the understated tax, deficiency, or unpaid tax is attributable (in full or in part) to you if any of the following exceptions apply.

   1. The item is attributable or partially attributable to you solely due to the operation of community property law. If you meet this exception, that item will be considered attributable to your spouse (or former spouse) for purposes of equitable relief.

   2. If the item is titled in your name, the item is presumed to be attributable to you. However, you can rebut this presumption based on the facts and circumstances.

   3. You didn’t know, and had no reason to know, that funds intended for the payment of tax were misappropriated by your spouse (or former spouse) for their benefit. If you meet this exception, the IRS will consider granting equitable relief although the unpaid tax may be attributable in part or in full to your item, and only to the extent the funds intended for payment were taken by your spouse (or former spouse).

   4. You establish that you were the victim of spousal abuse or domestic violence before the return was filed, and that, as a result of the prior abuse, you didn’t challenge the treatment of any items on the return for fear of your spouse’s (or former spouse’s) retaliation. If you meet this exception, relief will be considered even though the understated tax or unpaid tax may be attributable in part or in full to your item.

   5. The item giving rise to the understated tax or deficiency is attributable to you, but you establish that your spouse’s (or former spouse’s) fraud is the reason for the erroneous item.

Requesting relief.

For information on how and when to request relief from liabilities arising from community property laws, see Community Property Laws in Pub. 971.

Spousal agreements.

In some states, spouses may enter into an agreement that affects the status of property or income as community or separate property. Check your state law to determine how it affects you.

Spouses living apart all year.

If you’re married at any time during the calendar year, special rules apply for reporting certain community income. You must meet all of the following conditions for these special rules to apply.

1. You and your spouse lived apart all year.

2. You and your spouse didn’t file a joint return for a tax year beginning or ending in the calendar year.

3. You and/or your spouse had earned income for the calendar year that is community income.

4. You and your spouse haven’t transferred, directly or indirectly, any of the earned income in (3) between yourselves before the end of the year. Don’t take into account transfers satisfying child support obligations or transfers of very small amounts or value.

If all these conditions exist, you and your spouse must report your community income as explained in the following discussions. See also Certain community income not treated as community income by one spouse, earlier.

Earned income.

Treat earned income that isn’t trade or business or partnership income as the income of the spouse who performed the services to earn the income. Earned income is wages, salaries, professional fees, and other pay for personal services.

Earned income doesn’t include amounts paid by a corporation that are a distribution of earnings and profits rather than a reasonable allowance for personal services rendered.

Trade or business income.

Treat income and related deductions from a trade or business that isn’t a partnership as those of the spouse carrying on the trade or business.

Partnership income or loss.

Treat income or loss from a trade or business carried on by a partnership as the income or loss of the spouse who is the partner.

Separate property income.

Treat income from the separate property of one spouse as the income of that spouse.

Social security benefits.

Treat social security and equivalent railroad retirement benefits as the income of the spouse who receives the benefits.

Other income.

Treat all other community income, such as dividends, interest, rents, royalties, or gains, as provided under your state’s community property law.

Example.

George and Sharon were married throughout the year but didn’t live together at any time during the year. Both domiciles were in a community property state. They didn’t file a joint return or transfer any of their earned income between themselves. During the year, their incomes were as follows:

Under the community property law of their state, all the income is considered community income. (Some states treat income from separate property as separate income—check your state law.) Sharon didn’t take part in George’s consulting business.

Ordinarily, on their separate returns they would each report $30,500, half the total community income of $61,000 ($26,500 + $34,500). But because they meet the four conditions listed earlier under Spouses living apart all year, they must disregard community property law in reporting all their income (except the interest income) from community property. They each report on their returns only their own earnings and other income, and their share of the interest income from community property. George reports $26,500 and Sharon reports $34,500.

Other separated spouses.

If you and your spouse are separated but don’t meet the four conditions discussed earlier under Spouses living apart all year, you must treat your income according to the laws of your state. In some states, income earned after separation but before a decree of divorce continues to be community income. In other states, it is separate income.

Using the guidance

Keep the documents that establish the dates, amounts, and circumstances described above. References to other chapters, forms, worksheets, or earlier and later sections refer to the linked IRS publication. Check the full publication and its updates before relying on a rule for a different tax year or a situation not addressed here.

Sources and further reading

• Publication 504 (2025), Divorced or Separated Individuals: Community Property — Community Income — Community Property Laws Disregarded — Internal Revenue Service; 2025 edition.

The cited U.S. government text is in the public domain. Source accessed October 28, 2026. Fynoptic has organized this material for educational use and is independent of, and not endorsed by, the IRS.