Question

Dale lives in a community property state. He is separated from his spouse but the special rules under spouses living apart all year do not apply. Under a written agreement, he pays his spouse $12,000 of his $20,000 total yearly community income. His spouse receives no other community income. Under Dale’s state law, earnings of a spouse living separately and apart from the other spouse continue as community property. Dale must report what amount of the total community income on his income tax return?

A. $0

B. $2,000

C. $10,000

D. $12,000

Answer 1

C. 10,000

Each report the Half of the amount of total yearly community income is reported on separate tax return

20, 000 is community property income, it's half amount is 10,000

As per written agreement Dale pays 12000 to his spouse.

Dale spouse received as alimony of 2000 (12,000 -10,000) and it must be reported on income tax return

Dale may deduct of 2,000 as alimony paid to his spouse.

Note: 50% of community income must be reported by each spouse on income tax return if marital community ends with effect of divorce or separation. (50% of total community income reported by each spouse reported)