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Is it yours or theirs?  Community Property for tax purposes. Makes a difference, especially when $&#@ goes wrong!

If you file a federal tax return separately from your spouse, you must report half of all community income and all of your separate income. Likewise, a registered domestic partner must report half of all community income and all of his or her separate income on his or her federal tax return. You each must attach your Form 8958 to your Form 1040 showing how you figured the amount you are reporting on your return.

Generally, the laws of the state in which you are domiciled govern whether you have community property and community income or separate property and separate income for federal tax purposes. The following is a summary of the general rules. These rules are also shown in Table 1.

Community property. Generally, community property is property:

That you, your spouse (or your registered domestic partner), or both acquire during your marriage (or registered domestic partnership) while you and your spouse (or your registered domestic partner) are domiciled in a community property state.

That you and your spouse (or your registered domestic partner) agreed to convert from separate to community property.  That cannot be identified as separate property.

Community income. Generally, community income is in- come from:

Community property.

Salaries, wages, and other pay received for the services performed by you, your spouse (or your registered domestic partner), or both during your marriage (or registered domestic partnership) while domiciled in a community property state.

Real estate that is treated as community property under the laws of the state where the property is located.

Separate property. Generally, separate property is:

Property that you or your spouse (or your registered domestic partner) owned separately before your marriage or registered domestic partnership).

Money earned while domiciled in a non-community property state.

Property that you or your spouse (or your registered domestic partner) received separately as a gift or inheritance during your marriage (or registered domestic partnership).

Property that you or your spouse (or your registered domestic partner) bought with separate funds, or acquired in exchange for separate property, during your marriage (or registered domestic partnership).

Property that you and your spouse (or your registered domestic partner) converted from community property to separate property through an agreement valid under state law.

The part of property bought with separate funds, if part was bought with community funds and part with separate funds.

Separate income. Generally, income from separate property is the separate income of the spouse (or the registered domestic partner) who owns the property.

 For more information click here:  https://www.irs.gov/pub/irs-pdf/p555.pdf

steve@stevesimsea.com