Community Property Deductions and Non-Deductible Marital Property

How spouses split community property deductions

Couple doing taxes together at home

Fizkes / Getty Images 

Married couples who choose not to file joint returns must identify their community income and community deductions so they know how much each spouse should report and claim on a separate tax return. Most deductions will be split evenly, with each spouse reporting half the total, but you must allocate some separately. Other deductions can have a mixed allocation.

Key Takeaways

  • The issue of who gets which deductions when a couple is married in a community property state is only a factor if they file separate tax returns. 
  • One deciding factor is whether the associated property is a community asset or a separate asset.
  • Separate property is that which was owned prior to the marriage or received by gift or inheritance.
  • The spouse who owns separate property is entitled to the associated tax deduction.

Splitting Tax Deductions

A distinction is made between assets that are considered legally owned by both spouses as their marital community, referred to as "community property," and those that are legally considered to be owned only by one spouse. These are referred to as "separate property."

Rules for deductions and reporting income are classified by whether the underlying asset is community property or separate property in the nine community property states, and whether the income is community income or separate income.


Arizona, California, Idaho, Louisiana, New Mexico, Nevada, Texas, Washington, and Wisconsin observe community property law as of 2022. Spouses in Alaska can opt to enter into a community property agreement.

For example, a deduction for investment expenses would be a community deduction if the investment were community property. The deduction would be a separate deduction for the spouse who earned the income if the investment were that spouse's separate asset. The deduction would be allocated in the same proportion if an investment were a mix of community and separate property.

Standard Deduction vs. Itemized Deductions

Married couples filing separately must both itemize, or they must both take the standard deduction. You might want to take whichever option is more beneficial across both separate returns.

The Deduction for Traditional IRAs

Individual retirement accounts (IRAs) are considered to be a spouse's separate property under federal tax laws. Each spouse will determine their eligibility for a traditional IRA deduction based on earned income calculated without regard to the community property rules. The same goes for determining eligibility for a Roth IRA.

Mortgage Interest and Property Tax Deductions

Tax deductions relating to real estate are allocated based on whether the property is community property or separate property. The deduction for mortgage interest and property taxes would be split evenly if the home were owned as community property. The spouse who is the owner of the property would take the deductions if the home were owned as separate property.


These are both itemized deductions, so one spouse can't claim them if the other claims the standard deduction if they file separate returns.

Personal Itemized Deductions

Personal expenses, such as those for medical expenses, gifts to charity, and college tuition, would be deductible for the spouse who actually paid the expense if they're paid from that spouse's separately maintained funds. Again, many of these are itemized deductions, so one spouse couldn't claim them if the other were claiming the standard deduction on a separate return.

Spouses would evenly divide the deduction between themselves if the expense were paid out of community funds, such as a jointly owned bank account.

Alimony Deductions

If you divorced in 2019 or later, alimony payments won't affect your taxes. If you were divorced in 2018 or earlier, the alimony payments you make may be tax-deductible, and the alimony payments you receive must generally be declared as income.

Frequently Asked Questions (FAQs)

Is it better to file a spearate return or a joint return when you're married?

The married filing jointly status is considered the far better option of the two. The Internal Revenue Code prohibits separate filers from claiming certain tax credits and deductions. The rules regarding qualifying for others are stricter.

How is income reported on a separate tax return in a community property state?

Spouses who file separate tax returns must report their half of the community or marital income and the total of any separate income they may have received. Separate income is anything that derives from separate property, such as rents produced from premarital real estate.

Was this page helpful?
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. IRS. "Section 1. Basic Principles of Community Property Law."

  2. IRS. "Topic No. 501 Should I Itemize?"

  3. IRS. "Publication 555 (03/2020), Community Property."

  4. IRS. "Topic No. 452 Alimony and Separate Maintenance."

Related Articles