A community property state is a state where most property that is acquired during a marriage is considered owned jointly by both spouses. In the event of death, divorce or annulment the property is divided. Community property laws also apply to Registered Domestic Partners (RDP's) in certain states, such as California and Washington. Federal tax law generally defers to state law on matters relating to property.
Generally, 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. A Registered Domestic Partner must also report half of all community income and all of his or her separate income on their federal tax 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.
There are 9 community property states:
- Arizona
- California
- Idaho
- Louisiana
- Nevada*
- New Mexico
- Texas*
- Washington*
- Wisconsin
* These states are Community Property States and have No State Income Tax.
How do I allocate our income?
If a taxpayer in a community property state files a Married Filing Separate (MFS) return, they must fill out the MFS Allocation for Community Property states. To find this form go to:
- Federal Section
- Miscellaneous Forms
This is where they will list the spouse's return information. For Registered Domestic Partners you would fill out your federal returns separately and then combine your information on the state return only.
Community property is generally property that you, your spouse, or (RDP/California or Washington same-sex spouse) or both acquire during your marriage while you and your spouse are domiciled in a community property state. Possessions and income that you and your spouse agreed to convert from separate to community property and is not identified as separate property.
For more information on Community Property see Publication 555 and Form 8958.
Form 8958 instructions can be found within this Knowledgebase article.