Community property income year of divorce

[Jesse]

Community property state -if the couple did not reside together for the entire year of 2009 can community property income be disregarded for Federal?

I know for year of divorce I need to split the income for Wisconsin, up to the date of divorce, but I thought that I came across information that Federal does not follow state if the couple did not reside together for the entire year and I can't seem to find it now. Maybe I was dreaming?

[Maribeth]

My understanding of federal vs state is a little different than yours. I believe that the STATE controls when the marital community is terminated. I do not know what your state laws say, but in my state, the marital community dissolves, for tax purposes, at the point that bed & board are broken. For example, when one spouse moves out, the marital community is broken.

Maribeth

[JG EA]

Yes Pub 555 explains it goes by state law on this.
It is sometimes said Federal is different because they go by the marital status at the end of the year. I have been known to do things separately for the whole year if my TP doesn't have access to the ex's records for the time up to the split. But I make sure they understand that the IRS could adjust their income, etc.

I had a client once that his ex filed a statement splitting income up to the point of their split because it worked out better for her and TP had to adjust his return.

[outwest]

In my state..

most income up to the date of divorce must be split between the spouses (including the withholding) then becomes separate after that.

Note that this is not caught by the IRS but by my Idaho state tax commission which has a special screen on their processing system for married filing separate returns. They are looking for this exact thing not being done.

On the other hand, the IRS often tries to ignore the community allocation contrary to their own regs. When calling the IRS, it's best to check if the agent is in Fresno or Austin. (CA and TX are community property states) If not, hang up and call back till you get one. Trying to explain community property to someone in Atlanta or Cincinnati is all but impossible.