How is community income reported after separation?

The rule in one paragraph

If your domicile is in a community property state during any part of the tax year, you may have community income. The publication names nine such states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. State law decides whether income is separate or community. When you and your spouse file separate returns, you report half of any income that state law treats as community income plus all of your separate income, and your spouse reports the other half of the community income plus all of theirs. Each of you can claim credit for half the income tax withheld from community income.

The exception for spouses living apart

Special rules apply if you were married at any time during the calendar year and meet all four conditions. You and your spouse lived apart all year. You did not file a joint return for a tax year beginning or ending in the calendar year. You or your spouse had earned income for the year that is community income. And you did not transfer, directly or indirectly, any of that earned income between yourselves before year end; transfers satisfying child support obligations and transfers of very small amounts are ignored. When all four are met, you disregard community property law for most income and report as follows. Earned income that is not business or partnership income belongs to the spouse who performed the services. Business income and its deductions belong to the spouse carrying on the business. Partnership income goes to the spouse who is the partner. Income from a spouse’s separate property is that spouse’s. Social security benefits belong to the spouse who receives them. Other income, such as dividends, interest, rents, royalties or gains, follows your state’s community property law.

Worked example from the publication

George and Sharon were married all year, lived apart, filed separately, and did not transfer earned income. All their income is community income under their state’s law. George had $20,000 of wages, $5,000 from a consulting business and $1,000 of dividends from separate property, plus $500 of community interest, for $26,500. Sharon had $22,000 of wages, $10,000 from a partnership and $2,000 of dividends, plus $500 of community interest, for $34,500. Ordinarily each would report $30,500, half of $61,000. But because they meet the four conditions, they each report only their own earnings and other income plus their share of the community interest. George reports $26,500 and Sharon $34,500. To reproduce it, enter $26,000 and $34,000 as the earned and other income (wages, business, partnership and separate-property dividends) and $1,000 as the total community interest; the tool splits the interest evenly. Untick the box to see the ordinary half-and-half result of $30,500 each.

Separated but not meeting the four conditions

If you are separated but do not meet all four conditions, treat income under your state law. In some states, income earned after separation but before a divorce decree continues as community income; in others it is separate. Check your state law, because the publication does not decide it for you.

When the community ends

When the marital community ends through divorce or separation, the community assets are divided, and each spouse is taxed on half the community income for the part of the year before the community ends. Income received afterwards is separate income of the spouse to whom it belongs. An absolute decree of divorce or annulment ends the community in all community property states. A decree of legal separation or separate maintenance may or may not end it, depending on the court. A separation agreement may divide the property and make future earnings separate. In some states the community ends when the spouses permanently separate even without a formal agreement.

Relief and alimony

The publication describes relief if you did not report an item of community income: you may escape the tax on certain items (wages, a sole proprietorship, a partnership share or separate-property income of your spouse) if you did not file jointly, did not know and had no reason to know of the income, and it would be unfair to include it. Equitable relief is also available on stated conditions; see Publication 971. For alimony under pre-2019 instruments, payments are not deductible to the extent they are the recipient’s part of community income: in the publication’s example, a payer who pays $12,000 of $20,000 of yearly community income deducts only $2,000, and the recipient reports $10,000 community income plus $2,000 alimony. Compare with the alimony taxability page.

Sources

• IRS Publication 504, Divorced or Separated Individuals (2025): Community Property: community property states, Community Income, Spouses living apart all year, Other separated spouses, Ending the Marital Community and Alimony (Community Income). Read November 2, 2026.

Edition read: Publication 504 (2025), for use in preparing 2025 returns. Dollar limits and dates in this publication are for 2025; check the current publication and form instructions for your tax year. This page summarizes the publication and does not replace it.