Q My husband and I are filing for divorce in 2025. My attorney told me that we can file “Married Filing Separately” or “Married Filing Jointly” for 2024. Can you please give me the basics regarding community property rules if I decide to file a separate tax return?

A You should understand how community property laws affect the way you figure your income on your income tax returns. Your taxes are affected by community property laws only if you are married, live in a community property state and are filing separate returns. In most cases, your tax will be less by filing a joint return if you are married. Sometimes, however, it may be to your advantage to file separate returns. If you and your spouse are filing separate returns, you have to determine your community income and your separate income.

The following are community property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.

Community property >> Community property is all property acquired by a husband or wife, or both, during their marriage while they are domiciled in a community property state. Certain property acquired by gift or inheritance, by purchase with separate funds, or by exchange of separate property for other property is not community property. Community property also includes property that spouses have agreed to convert from separate property to community property. According to state law, each spouse owns half the community property. Community property belongs as much to one spouse as it does to the other. If property cannot be identified as separate property, it will be considered community property. For federal tax purposes, the property is classified according to the laws of the state in which you reside.

Community income >> Generally, community income is all income from community property. It includes salaries, wages and other pay for the services of either or both a husband and wife during marriage. Income from real estate is community income if it is so treated under the laws of the state in which the real estate is located.

The classification of income as either community or separate is important if you and your spouse file separate tax returns. If you do so, half the community income must be reported by you and the other half by your spouse.

Community property laws will not apply to an item of community income and you will be responsible for reporting it if you treat the item as if only you are entitled to the income and you do not notify your spouse of the nature and amount of the income by the due date for filing the return (including extensions).

Relief from separate return liability for community income >> You are not responsible for reporting an item of community income if you meet all of the following conditions:

1. You do not file a joint return for the tax year.

2. You do not include that item of community income in your gross income on your separate return.

3. You establish that you did not know of (and had no reason to know of) that community income.

Under all facts and circumstances, it would not be fair to include the item of community income in your gross income.

Deductions >> If you file separate returns, business or investment expenses incurred to earn or produce community business or investment income are generally divided between you and your spouse. Each of you is entitled to deduct one-half of the expenses on your separate returns. If you file separate returns, expenses incurred to earn or produce separate business or investment income are deductible by the spouse who owns the income.

Personal expenses that are paid out of separate funds, such as medical expenses, are deductible by the spouse who pays them. If these expenses are paid from community funds, the deduction is divided equally between you and your spouse.

Unfortunately, you will need the cooperation of your husband to determine whether you file jointly or separately. If applicable, I recommend that you seek legal counsel to help you obtain the required information to file your tax returns in a timely fashion.

Barry Dolowich is a certified public accountant and owner of a full service accounting and tax practice with offices in Monterey. He can be reached at (831) 372-7200. Please address any questions to Barry at PO Box 710 Monterey, CA 93942-0710 or email: bdolowich@gmail.com