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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
Alimony received. You aren't required to include as in- the Civil Service Retirement Act (CSRS) or Federal Em-
come alimony or separate maintenance payments you re- ployee Retirement System (FERS).
ceive, under a divorce or separation agreement executed Whether a civil service annuity is separate or commun-
(1) after December 31, 2018, or (2) on or before Decem- ity income depends on your marital status (or your status
ber 31, 2018, but modified after that date if the modifica- as a registered domestic partner) and domicile of the em-
tion expressly states that these changes apply to the mod- ployee when the services were performed for which the
ification. If an agreement was executed on or before annuity is paid. Even if you now live in a noncommunity
December 31, 2018, and modified after that date but it did property state and you receive a civil service annuity, it
not expressly state that the changes apply to the modifica- may be community income if it is based on services you
tion, then the following rules apply. performed while married (or during the registered domes-
Alimony or separate maintenance payments made prior tic partnership) and domiciled in a community property
to divorce are taxable to the payee spouse only to the ex- state.
tent they exceed 50% (his or her share) of the reportable If a civil service annuity is a mixture of community in-
community income. This is so because the payee spouse come and separate income, it must be divided between
is already required to report half of the community income. the two kinds of income. The division is based on the em-
See also Payments not alimony, later. ployee's domicile and marital status (or registered domes-
tic partnership) in community and noncommunity property
Gains and losses. Gains and losses are classified as states during his or her periods of service.
separate or community depending on how the property is
held. For example, a loss on separate property, such as Example. Henry Wright retired this year after 30 years
stock held separately, is a separate loss. On the other of civil service. He and his wife were domiciled in a com-
hand, a loss on community property, such as a casualty munity property state during the past 15 years.
loss to your home held as community property, is a com- Since half the service was performed while the Wrights
munity loss. See Publication 544, Sales and Other Dispo- were married and domiciled in a community property
sitions of Assets, for information on gains and losses. See state, half the civil service retirement pay is considered to
Publication 547, Casualties, Disasters, and Thefts, for in- be community income. If Mr. Wright receives $1,000 a
formation on losses due to a casualty or theft. month in retirement pay, $500 is considered community
income—half ($250) is his income and half ($250) is his
Withdrawals from individual retirement arrange- wife's.
ments (IRAs) and Coverdell Education Savings Ac-
counts (ESAs). There are several kinds of individual re- Military retirement pay. State community property
tirement arrangements (IRAs). They are traditional IRAs laws apply to military retirement pay. Generally, the pay is
(including SEP-IRAs), SIMPLE IRAs, and Roth IRAs. IRAs either separate or community income based on the marital
and ESAs by law are deemed to be separate property. status and domicile of the couple while the member of the
Therefore, taxable IRA and ESA distributions are separate Armed Forces was in active military service. For example,
property, even if the funds in the account would otherwise military retirement pay for services performed during mar-
be community property. These distributions are wholly riage and domicile in a community property state is com-
taxable to the spouse (or registered domestic partner) munity income.
whose name is on the account. That spouse (or registered Active military pay earned while married and domiciled
domestic partner) is also liable for any penalties and addi- in a community property state is also community income.
tional taxes on the distributions. This income is considered to be received half by the
member of the Armed Forces and half by the spouse.
Pensions. Generally, distributions from pensions will be
characterized as community or separate income depend- Partnership income. If an interest is held in a partner-
ing on the respective periods of participation in the pen- ship, and income from the partnership is attributable to the
sion while married (or during the registered domestic part- efforts of either spouse (or registered domestic partner),
nership) and domiciled in a community property state or in the partnership income is community property. If it is a
a noncommunity property state during the total period of separate property partnership and the income from the
participation in the pension. See the example under Civil partnership isn't attributable to the efforts of either spouse,
service retirement, later. These rules may vary between the partnership income will be characterized in accord-
states. Check your state law. ance with the discussion under Income from separate
property, later.
Lump-sum distributions. If you were born before
January 2, 1936, and receive a lump-sum distribution from Tax-exempt income. For spouses, community income
a qualified retirement plan, you may be able to choose an exempt from federal tax generally keeps its exempt status
optional method of figuring the tax on the distribution. For for both spouses. For example, under certain circumstan-
the 10-year tax option, you must disregard community ces, income earned outside the United States is tax ex-
property laws. For more information, see Publication 575, empt. If you earned income and met the conditions that
Pension and Annuity Income, and Form 4972, Tax on made it exempt, the income is also exempt for your
Lump-Sum Distributions. spouse even though he or she may not have met the con-
ditions. Registered domestic partners should consult the
Civil service retirement. For income tax purposes,
community property laws apply to annuities payable under
Publication 555 (January 2019) Page 5
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