Deductions & credits

DeanieO · ‎March 13, 2021

Your guidance facts apply to married individuals filing separately under special rule for filing as head of household.

That is not my situation. Specifically, you note rules for the earned income for the EIC if I am married. I did not try to file as head of household while married and I am not married now

"If you are married, but qualify to file as head of household under rules for married taxpayers living apart (see Pub. 501, Dependents, Standard Deduction, and Filing Information), and live in a state that has community property laws, your earned income for the EIC doesn't include any amount earned by your spouse that is treated as belonging to you under community property laws. "

The facts applicable in my case (and ALL these facts are pertinent to lead us to the correct answer) I was married (in 2019, the PYEI I'm looking back to) and while married I filed jointly. But now, in the 2020 tax year where I have this question, I am not married. I am divorced head of household filing as an individual and have lived all these years in a community property state.

Pub 555: Community income.

Generally, community income is income from:

Community property;
Salaries, wages, and other pay received for the services performed by you, your spouse (or your registered domestic partner), or both during your marriage (or registered domestic partnership) while domiciled in a community property state

Pub 504:

Ending the Marital Community
When the marital community ends as a result of divorce or separation, the community assets (money and property) are divided between the spouses. Each spouse is taxed on half the community income for the part of the year before the community ends. However, see Spouses living apart all year, earlier. Income received after the community ended is separate income, taxable only to the spouse to whom it belongs.

My married 'community' ended by state laws according to an agreement entered into on 1-1-2020. So what was all our joint income in 2019 seems to be according to the IRS all community income, and that includes wages earned by both of us. And so at end of that marital community according to the IRS it seems to me that half of that joint/community income from 2019 is mine to look back to and report as a tax individual now filing my 2020 return (and also all my individual earnings for 2020 are mine alone in this same tax filing)

You point out a circumstance suggesting somehow all of that ceases to be true with regards to the Earned Income Credit, but Pub 596 doesn't tell me definitively what to do in my case, and especially not in the PYEI look back situation.

"You can elect to use your 2019 earned income to figure your 2020 earned income credit (EIC) if your 2019 earned income is more than your 2020 earned income. "

That is my situation (but only if my PYEI is 1/2 that joint/community income)

I'm not seeing any IRS explanation or reason not to divide 2019 joint/community earned income in half to report it as my PYEI (divided up community property post divorce) as I elect to look back to claim the EITC in 2020 .

And, form 8958 says it's for married persons. In 2019 I was married but in tax return year 2020 I am not but I am nevertheless needing to explain to the IRS how I'm dividing the community income from 2019 in my PYEI. So should I file it with my non-married 2020 tax return? I'm thinking better more information/explanation than less? So I'll file it?

Does anyone here know HOW to get the IRS to research and give a definitive answer? I am frustrated not to be able to ask the folks who will assess if my tax return will or will not be accepted if I do it this way or not. And does anyone know if I do this and IRS decides its an error for me to claim 1/2 the income from 2019, will I suffer the "denied or reduced for any reason other than a math or clerical error" issue? I don't want to be prevented from future earned income credits because of my misunderstanding their laws that they refuse to give me a means to ask a question about. I'm not trying to cheat, I'm trying to do the right thing as well as maximize my credit in a current year of truly awful earnings.