I am super thankful for the response and although I believe you because you are a tax expert, my concern is the limitation of focus onto only the rules regarding the EITC and PYEI and divorce. "There is no further directions for adjusting 2019 earned income following a divorce." I am looking at Pub 555 regarding community property. (I live in WA state)
I am thinking about the similar situation of how in filing the FAFSA for federal purposes, because 'community property' has now ended, the IRS guidance there did instruct me to report only HALF of all the figures of my 2019 joint return as belonging to me as one individual filing a FAFSA for my dependents. Although my ex spouse's figures made up part of that 2019 tax return in 2019 as I am reporting it now in 2020 just under my head of household record, I was instructed to report only 1/2 the figures for each line of the tax return (effectively splitting the 2019 filing in half as we went our separate ways, taking only our 1/2 as now reportable onto our individual records)
My thinking is this: Clearly the REASON for the PYEI election for 2020 tax year is based upon the idea that Covid seriously changed people's 'earned income' situations. That is true in my case. But it is ALSO true that my situation as a 2020 tax filer, for the first time filing as an individual in Head of Household status, had a serious change of 'earned income' because I'm divorced. I believe the PYEI election is supposed to reflect what I 'would have/could have' earned (as the ONE person I am now filing as) had it not been for Covid taking my job income. Not what I would have/could have earned had I stayed as a married person. At divorce, the 'community property' ends. In my thinking it also ends my ability to call even a prior year's earned income all mine. What I am getting at is that if my prior year earned income is reported now under this election TOGETHER with the prior year earned income of my ex spouse, that married income from 2019 exceeds an amount that would earn any EITC. (We claimed no EITC as a couple in 2019.) But looking at community property laws I actually only got the benefit of exactly HALF that income in 2019 and I am feeling as if now, if I were in 2020 to use that TOTAL JOINT income from 2019 as my look back for PYEI now, I am being penalized and robbed of a much-needed higher EITC since my current tax-fling situation is in no way ever going to have that same amount of JOINT income in any tax year now or any time soon. And under my own tax record, I as the one person now filing her taxes in 2020 only 'owned' HALF of the 'community property' earned income figure reported in 2019 when I was part of a couple. (Clearly, the FAFSA rules understood this and discussed it.)
So those answering here, have you thoroughly researched and applied the IRS community property guidance to the PYEI situation I describe? In other words, at divorce, isn't my 2019 joint tax return (and all prior years) essentially a piece of community property that needs to be spit up 50-50 between us? So the PYEI is 50% his and 50% mine for reporting now as divorced people?
Of note: The law specifically says "If the earned income of the taxpayer for the taxpayer’s first taxable year beginning in 2020 is less than the earned income of the taxpayer for the preceding taxable year,"
Isn't the earned income "of (me,) the (individual) taxpayer" only 1/2 the earned income of my prior marriage/community-held property?
