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Married filing separate in community property state without spouse income info?
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keith....@gmail.com
Jan 22, 2014, 6:32:00 PM1/22/14
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Spouses live apart in different states, one of which is Arizona (a community property state). Wife cannot get income information from the husband, so wife cannot complete Form 8958.
How does the wife file the return?
The IRS will disregard community property laws under certain circumstances. IRS Pub 555 Community Property discusses this - see the section titled "Community Property Laws Disregarded". There is a 5 part test to determine if a spouse can be relieved from liability arising from community property law. To request relief under this rule, it says to see Pub 971 Innocent Spouse Relief.
Pub 971 has a section titled "Community Property Laws". It lists the same 5 part test listed in Pub 555, but provides a little more explanation. The 4th prong of the test requires you to establish that you did not know of, and had no reason to know of, the community property you are trying keep out of your income tax return. It then goes on to explain what constitutes knowledge of the community property. It says not knowing the specific amount of income is not a basis for relief if you are aware of the source of income or income the income-producing activity.
The wife knows the husband had two jobs, but doesn't have any wage or withholding information from those jobs and cannot get the information from her husband.
HOW DOES THE FILE THE RETURN?
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How does the wife file the return?
The IRS will disregard community property laws under certain circumstances. IRS Pub 555 Community Property discusses this - see the section titled "Community Property Laws Disregarded". There is a 5 part test to determine if a spouse can be relieved from liability arising from community property law. To request relief under this rule, it says to see Pub 971 Innocent Spouse Relief.
Pub 971 has a section titled "Community Property Laws". It lists the same 5 part test listed in Pub 555, but provides a little more explanation. The 4th prong of the test requires you to establish that you did not know of, and had no reason to know of, the community property you are trying keep out of your income tax return. It then goes on to explain what constitutes knowledge of the community property. It says not knowing the specific amount of income is not a basis for relief if you are aware of the source of income or income the income-producing activity.
The wife knows the husband had two jobs, but doesn't have any wage or withholding information from those jobs and cannot get the information from her husband.
HOW DOES THE FILE THE RETURN?
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>
Mark Bole
Jan 23, 2014, 11:08:21 AM1/23/14
to
On 2014-01-22 15:32, keith....@gmail.com wrote:
> Spouses live apart in different states, one of which is Arizona (a
community property state). Wife cannot get income information from the
husband, so wife cannot complete Form 8958.
>
> How does the wife file the return?
[...]
> Spouses live apart in different states, one of which is Arizona (a
community property state). Wife cannot get income information from the
husband, so wife cannot complete Form 8958.
>
> How does the wife file the return?
You don't say which spouse lives in Arizona, but let's assume it's the
husband (not the spouse you are asking about).
First, community property only applies when one is domiciled in a
community property state. Check whether he is actually domiciled in
Arizona. Domicile is similar to, but not the same, as residency. You
have exactly one domicile at any given time, so you do not lose your old
domicile until you establish a new one. She may not even have enough
information to determine what his domicile currently is.
Second, community property rules don't apply if the marital community
has ended, i.e. spouses living apart with no intention to reconcile
(typically, heading for a divorce, but that can take years in some cases).
Third, and this is just my opinion, the IRS would much rather a return
be filed without the community income split, than no return be filed at
all. I would just file the MFS return showing no community income
received, and 100% of wife's income and deductions. Unless the husband
shows an allocation of 50% of income to his wife on his own Form 8958,
there may not even be any follow-up from the IRS.
--
Mark Bole, EA
Enrolled Agents - America's Tax Experts
http://markboletax.com
Alan
Jan 23, 2014, 2:41:09 PM1/23/14
to
On 1/23/2014 9:08 AM, Mark Bole wrote:
> On 2014-01-22 15:32, keith....@gmail.com wrote:
>> Spouses live apart in different states, one of which is Arizona (a
> community property state). Wife cannot get income information from the
> husband, so wife cannot complete Form 8958.
>>
>> How does the wife file the return?
> [...]
>
> You don't say which spouse lives in Arizona, but let's assume it's the
> husband (not the spouse you are asking about).
>
> First, community property only applies when one is domiciled in a
> community property state. Check whether he is actually domiciled in
> Arizona. Domicile is similar to, but not the same, as residency. You
> have exactly one domicile at any given time, so you do not lose your old
> domicile until you establish a new one. She may not even have enough
> information to determine what his domicile currently is.
>
> Second, community property rules don't apply if the marital community
> has ended, i.e. spouses living apart with no intention to reconcile
> (typically, heading for a divorce, but that can take years in some cases).
>
> Third, and this is just my opinion, the IRS would much rather a return
> be filed without the community income split, than no return be filed at
> all. I would just file the MFS return showing no community income
> received, and 100% of wife's income and deductions. Unless the husband
> shows an allocation of 50% of income to his wife on his own Form 8958,
> there may not even be any follow-up from the IRS.
>
>
I don't have any issues with your comments other than your second point
> On 2014-01-22 15:32, keith....@gmail.com wrote:
>> Spouses live apart in different states, one of which is Arizona (a
> community property state). Wife cannot get income information from the
> husband, so wife cannot complete Form 8958.
>>
>> How does the wife file the return?
> [...]
>
> You don't say which spouse lives in Arizona, but let's assume it's the
> husband (not the spouse you are asking about).
>
> First, community property only applies when one is domiciled in a
> community property state. Check whether he is actually domiciled in
> Arizona. Domicile is similar to, but not the same, as residency. You
> have exactly one domicile at any given time, so you do not lose your old
> domicile until you establish a new one. She may not even have enough
> information to determine what his domicile currently is.
>
> Second, community property rules don't apply if the marital community
> has ended, i.e. spouses living apart with no intention to reconcile
> (typically, heading for a divorce, but that can take years in some cases).
>
> Third, and this is just my opinion, the IRS would much rather a return
> be filed without the community income split, than no return be filed at
> all. I would just file the MFS return showing no community income
> received, and 100% of wife's income and deductions. Unless the husband
> shows an allocation of 50% of income to his wife on his own Form 8958,
> there may not even be any follow-up from the IRS.
>
>
on when a community ends is not applicable in all of the 9 CP states.
Maybe you should have used "e.g." instead of "i.e."
E.g., in the two states I am familiar with (CA & NM), your statement
holds true for CA. The date a couple stops sharing a household with no
immediate intention to reconcile will end the community. Not so, in NM.
The community ends on the date of legal separation or dissolution of the
marriage.
I don't know the rules for AZ, but based on some divorce cases I am
aware of, I think they probably follow NM rules.
All of my statements above are specific to "end of community" and have
nothing to do with when CP law can be disregarded as outlined in revenue
code section 66 and explained in detail in Pub 555.
Mark Bole
Jan 23, 2014, 5:12:56 PM1/23/14
to
On 2014-01-23 11:41, Alan wrote:
[...]
Thanx for the reminder and clarification that there are variances in
community property laws between states.
A good opportunity to remind folks there is a lot of detail, including
state by state breakdown, at the IRS web site in the Internal Revenue
Manual, here is a link to a summary table, there is a lot of explanatory
text preceding it as well. CA and WA are the two states that recognize
the early end of the marital community when spouses permanently separate.
http://www.irs.gov/irm/part25/irm_25-018-001.html#d0e735
[...]
>>
> I don't have any issues with your comments other than your second point
> on when a community ends is not applicable in all of the 9 CP states.
> Maybe you should have used "e.g." instead of "i.e."
>
> E.g., in the two states I am familiar with (CA & NM), your statement
> holds true for CA. The date a couple stops sharing a household with no
> immediate intention to reconcile will end the community. Not so, in NM.
> The community ends on the date of legal separation or dissolution of the
> marriage.
[...]
> I don't have any issues with your comments other than your second point
> on when a community ends is not applicable in all of the 9 CP states.
> Maybe you should have used "e.g." instead of "i.e."
>
> E.g., in the two states I am familiar with (CA & NM), your statement
> holds true for CA. The date a couple stops sharing a household with no
> immediate intention to reconcile will end the community. Not so, in NM.
> The community ends on the date of legal separation or dissolution of the
> marriage.
Thanx for the reminder and clarification that there are variances in
community property laws between states.
A good opportunity to remind folks there is a lot of detail, including
state by state breakdown, at the IRS web site in the Internal Revenue
Manual, here is a link to a summary table, there is a lot of explanatory
text preceding it as well. CA and WA are the two states that recognize
the early end of the marital community when spouses permanently separate.
http://www.irs.gov/irm/part25/irm_25-018-001.html#d0e735
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