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Publication 971

Community Property Laws(p4)

You must generally follow community property laws when filing a tax return if you are married and live in a community property state. Community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Generally, community property laws provide that you and your spouse are both entitled to one-half of your total community income and expenses. If you and your spouse filed a joint return in a community property state, you are both jointly and severally liable for the total liability on the return. However, community property laws are not taken into account in determining whether an item belongs to you or to your spouse (or former spouse) if you request relief from joint and several liability.

Relief for Married Persons Who Did Not File Joint Returns(p4)

Married persons who live in community property states, but who did not file joint returns, have two ways to get relief.

Relief From Liability for Tax Attributable to an Item of Community Income(p4)

You are not responsible for the tax relating to an item of community income if all the following conditions exist.
  1. You did not file a joint return for the tax year.
  2. You did not include the item of community income in gross income.
  3. The item of community income you did not include is one of the following:
    1. Wages, salaries, and other compensation your spouse (or former spouse) received for services he or she performed as an employee.
    2. Income your spouse (or former spouse) derived from a trade or business he or she operated as a sole proprietor.
    3. Your spouse's (or former spouse's) distributive share of partnership income.
    4. Income from your spouse's (or former spouse's) separate property (other than income described in (a), (b), or (c)). Use the appropriate community property law to determine what is separate property.
    5. Any other income that belongs to your spouse (or former spouse) under community property law.
  4. You establish that you did not know of, and had no reason to know of, that community income. See Actual knowledge or reason to know, below.
  5. Under all facts and circumstances, it would not be fair to include the item of community income in your gross income. See Indications of unfairness for relief from liability for tax attributable to an item of community income, later.

Actual knowledge or reason to know.(p4)

You knew or had reason to know of an item of community income if:
Amount of community income unknown.(p4)
If you are aware of the source of the item of community income or the income-producing activity, but are unaware of the specific amount, you are considered to know or have reason to know of the item of community income. Not knowing the specific amount is not a basis for relief.
Reason to know.(p5)
The IRS will consider all facts and circumstances in determining whether you had reason to know of an item of community income. The facts and circumstances include:

Indications of unfairness for relief from liability for tax attributable to an item of community income.(p5)

The IRS will consider all of the facts and circumstances of the case in order to determine whether it is unfair to hold you responsible for the understated tax due to the item of community income.
The following are examples of factors the IRS will consider.
For other factors, see Factors for Determining Whether To Grant Equitable Relief, later.
Benefit from omitted item of community income.(p5)
A benefit includes normal support, but does not include de minimis (small) amounts. Evidence of a direct or indirect benefit may consist of transfers of property or rights to property, including transfers received several years after the filing of the return.
For example, if you receive property, including life insurance proceeds, from your spouse (or former spouse) and the property is traceable to omitted items of community income attributable to your spouse (or former spouse), you are considered to have benefitted from those omitted items of community income.

Equitable Relief(p5)

If you do not qualify for the relief described above and are now liable for an unpaid or understated tax you believe should be paid only by your spouse (or former spouse), you may request equitable relief (discussed later).

How and When To Request Relief(p5)

You request relief by filing Form 8857, as discussed earlier. Fill in Form 8857 according to the instructions.
For relief from liability for tax attributable to an item of community income, you must file Form 8857 no later than 6 months before the expiration of the period of limitations on assessment (including extensions) against your spouse for the tax year for which you are requesting relief. However, if the IRS begins an examination of your return during that 6-month period, the latest time for requesting relief is 30 days after the date the IRS' initial contact letter to you. The period of limitation on assessment is the amount of time, generally three years, that the IRS has from the date you filed the return to assess taxes that you owe.