Wis. Admin. Code Department of Revenue Tax 14.06

Current through October 28, 2024

Section Tax 14.06 - Marriage, separation or divorce during a claim year

(1) PURPOSE. This section describes the qualifications for a homestead credit and the computation of household income, property taxes accrued and rent constituting property taxes accrued of a claimant who becomes married or divorced during the year to which a homestead credit claim relates or whose spouse occupies a separate dwelling for any part of a claim year.

(2) MARRIAGE DURING A CLAIM YEAR.

(a) A new household is established when a marriage occurs during a claim year and the spouses reside together after the marriage. Under s. 71.53(1) (c), Stats., either the husband or the wife may claim a homestead credit for the year of the marriage but not both.

(b) Under s. 71.52(5), Stats., when a marriage occurs during a claim year and the spouses reside together after the marriage, household income shall include the claimant's income for the portion of the calendar year prior to the marriage and the total income of the household for the remainder of the year after the marriage.

(c) Under s. 71.52(7) and (8), Stats., the spouse filing a claim may claim property taxes accrued or rent constituting property taxes accrued for the homestead of the claimant for the portion of the year prior to a marriage plus the total of those amounts for the common homestead after the marriage.

Example: X marries Y on September 1, and they decide that X is to be the claimant. Prior to the marriage, X pays gross rent of $250 per month and Y pays gross rent of $350 per month. They pay gross rent of $500 per month for their jointly occupied apartment after the marriage. Heat is not included at any of the dwellings. X's income is $4,000 prior to the marriage, and X's services and property generate marital property income of $2,000 after the marriage. Y's income is $10,000 prior to the marriage, and Y's services and property generate marital property income of $5,000 after the marriage. There are no dependents.

In this situation, household income reportable by X is $11,000, consisting of X's $4,000 of income prior to the marriage plus the $7,000 income of both X and Y after the marriage. Rent constituting property taxes accrued which may be claimed by X is $1,000, which is 25% of the sum of X's rent of $250 per month for 8 months, or $2,000, and 4 months rent at $500 per month after the marriage, or $2,000, totaling $4,000 for the year. Since Y is not the claimant, Y's rent of $350 per month and income of $10,000 for the 8 months prior to the marriage are not considered in computing the homestead credit.

(3) SEPARATION OR DIVORCE DURING A CLAIM YEAR.

(a) If a husband and wife occupy separate homesteads for all or part of a claim year and continue to occupy separate homesteads on December 31 of that year, or if a husband and wife become divorced during a claim year and do not remarry each other by December 31 of that year, each may claim a homestead credit for that year if otherwise qualified, since 2 households exist at the end of the year. When one spouse has permanently moved into a nursing home and the other spouse remains at home, the husband and wife are considered to occupy separate dwellings at the end of the year.

(b) If a husband and wife occupy separate homesteads for part of a claim year but occupy the same homestead on December 31 of that year, only one of the spouses may claim a homestead credit for that year, since only one household exists at the end of the year.

(c) In the event a husband and wife occupy separate dwellings or become divorced during a claim year, household income is determined under s. 71.52(5), Stats., under Wisconsin income tax law and under marital property law as provided in ch. 766, Stats., except that marital property law does not apply if one of the spouses is not domiciled in Wisconsin during the period of time they occupy separate dwellings. Household income shall be determined as follows:

1. For the period of time the claimant and the claimant's spouse occupy a common homestead as members of the same household, household income shall include all income of both spouses, even if the "innocent spouse" provisions as provided in s. 71.10(6) (b) and (6m), Stats., are in effect for income tax purposes. If the claimant cannot exactly determine the income of the claimant's spouse during the portion of the year they occupy a common homestead, the claimant may make a reasonable estimate of the income and shall clearly indicate it as an estimate on the homestead credit claim.

2. For the period of time the claimant and the claimant's spouse occupy separate dwellings prior to the issuance of a divorce decree, household income shall include all of the claimant's income and none of the spouse's income, if the spouse is not domiciled in Wisconsin during that time. If the claimant's spouse remains a Wisconsin domiciliary during the period of time the claimant and the claimant's spouse occupy separate dwellings prior to the issuance of a divorce decree, household income shall include all non-marital property income of the claimant and the claimant's portion of marital property income as provided by marital property law, ch. 766, Stats., and by the "innocent spouse" provisions in s. 71.10(6) (b) and (6m), Stats. Under marital property law and the "innocent spouse" provisions, the extent to which marital property income during the period of time the spouses occupy separate dwellings is includable in household income depends on whether the claimant and the claimant's spouse notify each other of the amount and nature of marital property income generated by each, as follows:

a. If both spouses notify each other, 1/2 of all marital property income of both spouses is includable.

b. If the claimant notifies the spouse but the spouse does not notify the claimant, 1/2 of the marital property income generated by the claimant's services and property and none of the marital property income generated by the spouse's services and property is includable.

c. If the claimant does not notify the spouse but the spouse notifies the claimant, all of the marital property income generated by the claimant's services and property and 1/2 of the marital property income generated by the spouse's services and property is includable.

d. If neither spouse notifies the other, all of the marital property income generated by the claimant's services and property and none of the marital property income generated by the spouse's services and property is includable.

3. For the portion of the year after a divorce, household income shall include all income of the claimant only.

(d) In order to be valid, the notification referred to in par. (c) must be made by the spouse whose services or property produced the marital property income, prior to the due date of the Wisconsin income tax return, or if the allowable time for filing the Wisconsin income tax return has been extended, the extended due date.

(e) In the event a husband and wife occupy separate dwellings during all or part of a claim year or become divorced during a claim year, each spouse may claim the total amount of property taxes accrued or rent constituting property taxes accrued on the common Wisconsin homestead for the portion of the year they maintain that homestead plus their own amounts for the portion of the calendar year the spouses occupy separate dwellings or are not married to each other. However, as provided in par. (b), only one of the spouses may claim a homestead credit if they are not divorced or do not occupy separate dwellings on December 31 of that year.

Examples:

1) Separation at the end of a claim year. A husband and wife reside in their jointly owned homestead from January 1 to July 31, when the wife moves permanently to a Wisconsin nursing home that is not exempt from property taxes. The husband pays the heat and all the property taxes of $1,200 for the year. Rent paid by the wife for occupancy at the nursing home for the period August 1 through December 31 is $1,000, and the nursing home pays the heat. There are no dependents. Each spouse notifies the other of the marital property income generated by their respective services and properties. Income consists of both non-marital property income and marital property income, as follows:

Income	Husband	Wife
N-M.P.* January 1 - July 31	$ 4,000	$ 2,400
M.P.** January 1 - July 31	1,000	600
N-M.P.* August 1 - December 31	3,200	1,600
M.P.** August 1 - December 31	800	400
Total Income	$ 9,000	$ 5,000

* N-M.P . = non-marital property income

**M.P. = marital property income - in husband' s column, income generated by his services and property; in wife' s column, income generated by her services and property

Both husband and wife are otherwise qualified for the homestead credit. Household income, property taxes accrued, and rent constituting property taxes accrued applicable to each claimant for the year are computed as follows:

Household Income	Husband's	Wife's
	Claim	Claim
(H) N-M.P. January 1 - July 31*	$ 4,000	$ 4,000
(H) M.P January 1 - July 31*	1,000	1,000
(W) N-M.P. January 1 - July 31*	2,400	2,400
(W) M.P. January 1 - July 31*	600	600
(H) N-M.P. August 1 - December 31	3,200	0
(H) M.P. August 1 - December 31	400	400
(W) N-M.P. August 1 - December 31	0	1,600
(W) M.P. August 1 - December 31	200	200
Total Household Income	$ 11,800	$ 10,200
Property Taxes Accrued
(H) January 1 - July 31* (7/12X$1,200X1/2)	$ 350	$ 350
(W) January 1 - July 31* (7/12X$1,200X1/2)	350	350
(H) August 1 - December 31 (5/12X$1,200X1/2)	250	-
(W) August 1 - December 31	(see below)
Total Taxes	$ 950	$ 700
(H) 25% of wife's share of property taxes paid by husband for the period August 1 through December 31 (5/12X$1,200x1/2)X 25%**	$ 62.50	$-
(W) 20% of rent paid for occupancy only (20%X $1,000)	-	200
Total Allowable Taxes and Rent	$ 1,012.50	$ 900

* The income and taxes for the time the claimants are members of the same house - hold are reportable on both claims.

**The husband may claim as rent constituting property taxes accrued 25% of the wife's share of property taxes he pays for the period of time she does not reside in the jointly owned home.

2) Separation during a claim year but not on December 31. X and Y are married and live together through April 30. Y moves to another homestead in Wisconsin on May 1 but moves back to X's homestead on November 1 of the same year. Gross rent for the homestead X resides in is $300 per month all year, and gross rent for Y's homestead for May through October is $200 per month. Heat is not included at either dwelling. The income X's services and property generate is $1,000 per month for all 12 months, and the income Y's services and property generate is $500 per month for all 12 months. All income is marital property income, and X and Y both notify each other of the marital property income generated by their respective services and properties. There are no dependents. In this situation, since X and Y are one household at the end of the year, only one may file a claim for homestead credit; household income and rent constituting property taxes accrued for each spouse are computed as follows:

If X Is	If Y Is
Household Income	Claimant	Claimant
(X) January 1 - April 30*	$ 4,000	$ 4,000
(Y) January 1 - April 30*	2,000	2,000
(X) May 1 - October 31	3,000	3,000
(Y) May 1 - October 31	1,500	1,500
(X) November 1 - December 31*	2,000	2,000
(Y) November 1 - December 31*	1,000	1,000
Total Household Income	$ 13,500	$ 13,500
Rent Constituting Property Taxes Accrued (25% of Rent)
January 1 - April 30*	$ 300	$ 300
May 1 - October 31	450	300
November 1 - December 31*	150	150
Total Rent Constituting
Property Taxes Accrued	$ 900	$ 750

* The income and rent for the time the spouses are members of the same household are reportable on either claim

3) Divorce during a claim year. X and Z are married, live together through May 31, and pay gross rent of $400 per month to that date. On June 1 they both move to separate Wisconsin homesteads, and thereafter X pays gross rent of $300 per month and Z pays gross rent of $400 per month. Heat is not included at any of the dwellings. On November 30, X and Z are divorced. The income X's services and property generate is $4,000 through May 31 and $5,000 from June 1 to November 30, and X's income is $1,000 in December. The income Z's services and property generate is $2,000 through May 31 and $3,000 from June 1 to November 30, and Z's income is $2,000 in December. All income of both spouses through November 30 is marital property income. Each spouse notifies the other of the marital property income generated by their respective services and properties. There are no dependents. In this situation, household income and rent constituting property taxes accrued for each claimant are computed as follows:

Household Income	X's Claim	Z's Claim
(X) January 1 - May 31*	$ 4,000	$ 4,000
(Z) January 1 - May 31*	2,000	2,000
(X) June 1 - November 30	2,500	2,500
(Z) June 1 - November 30	1,500	1,500
(X) December 1 - December 31	1,000	-
(Z) December 1 - December 31	-	2,000
Total Household Income	$ 11,000	$ 12,000
Rent Constituting Property Taxes Accrued (25% of Rent)
(X) & (Z) January 1 - May 31*	$ 500	$ 500
(X) June 1 - December 31	525
(Z) June 1 - December 31	700
Total Rent Constituting
Property Taxes Accrued	$ 1,025	$ 1,200

* The income and rent for the time the claimants are members of the same household are reportable on both claims.

(4) DIVORCE AND REMARRIAGE DURING A CLAIM YEAR.

(a) If during a claim year a person occupies a separate dwelling from his or her spouse, is subsequently divorced, and is remarried to a different spouse and resides with the spouse after the marriage, a new household is established by the person and the new spouse. Under s. 71.53(1) (c), Stats., either of the new spouses may claim a homestead credit for the year of the marriage but not both.

(b) In the event that during a claim year a claimant occupies a separate dwelling from one spouse, is divorced from that spouse, and is remarried to a new spouse, household income with respect to the claimant and the former spouse for the portion of the claim year prior to the claimant's remarriage shall be determined as described in sub. (3) (c) and (d). For the portion of the claim year the claimant occupies a common homestead with the new spouse after the remarriage, household income shall include all income of both the claimant and the new spouse.

(c) In the event a claimant occupies a separate dwelling from his or her former spouse, is divorced, and is remarried during a claim year, the claimant may claim the total amount of property taxes accrued or rent constituting property taxes accrued on each common homestead for the portion of the year the claimant occupies a common homestead with a spouse, plus the claimant's share of property taxes accrued or rent constituting property taxes accrued for the portion of the calendar year the claimant occupies a separate dwelling from his or her spouse or is not married.

Example: X and Z are married and living together, even though a divorce action is pending. X and Z both move to separate Wisconsin homesteads on March 31 and a divorce is granted on April 30. On November 1 of the same year, X marries Y and they share the same homestead for the rest of the year. Z does not remarry during the year. Each individual or couple pays rent for the entire year, and heat is not included at any dwelling. There are no dependents. X and Z notify each other of the marital property income generated by their respective services and properties for January 1 to April 30. Notification between X and Y is immaterial because they do not occupy separate dwellings as husband and wife during the year. Income for each individual and gross rent paid for the year are as follows:

Income	X	Y	Z
January 1 - March 31	$ 2,000*	$ 1,500	$ 1,000*
April 1 - April 30	1,000*	200	400*
May 1 - October 31	6,000	4,000	3,000
November 1 - December 31	2,000*	500*	2,000
$11,000	$ 6,200	$ 6,400

* In this example, all income of each spouse while married to each other is marital property income, and the income listed in each column is the income generated by that person's services and property.

Gross Rent Paid	X	Y	Z	X+Z	X+Y
January 1 - March 31	$-	$600	$-	$900
April 1 - October 31	1,800	1,400	1,400	-	-
November 1 -December 31	-	-	400	-	500

Since X and Y are one household at the end of the year, only one of them may file a claim for homestead credit. Z is also entitled to file a homestead credit claim for the year. Household income and rent constituting property taxes accrued are computed as follows: -

Household Income	If X Is Claimant	If Y Is Claimant	Z's Claim
January 1 - March 31	(X)*	$2,000	(Y)	$1,500	(Z)*	$1,000
January 1 - March 31	(Z)*	1,000	-	(X)*	2,000
April 1 - April 30	(X)	500	(Y)	200	(Z)	200
April 1 - April 30	(Z)	200	-	(X)	500
May 1 - October 31	(X)	6,000	(Y)	4,000	(Z)	3,000
November 1 -December 31	(X)*	2,000	(Y)*	500	(Z)	2,000
November 1 -December 31	(Y)*	500	(X)*	2,000	-
Total Household Income		$12,200	$8,200	$8,700
Rent Constituting Property Taxes accrued (25% of Rent)
January 1 -March 31	(X+Z)*	$225	(Y)	$150	(X+Z)*	$225
April 1 -October 31	(X)	450	(Y)	350	(Z)	350
November 1 -December 31	(X+Y)*	125	(X+Y)*	125	(Z)	100
Total Rent Constituting
Property Taxes Accrued	$800	$625	$675

* The income and rent for the time the claimants are members of the same household are reportable on each claim filed.

Wis. Admin. Code Department of Revenue Tax 14.06

Cr. Register, February, 1990, No. 410, eff. 3-1-90; am. (1) and (3) (c) (intro.), Register, July, 2000, No. 535, eff. 8-1-00.

In each of the examples in subs. (2), (3), and (4), the spouses notify each other of the amount and nature of the marital property income generated by their respective services and properties. While it is more common for notification not to occur, each example assumes notification for purposes of illustrating the household income computation, which is far more complex under notification than under non-notification situations. In non-notification situations, the claimant merely includes all of the income generated by his or her services and property and none of the income generated by the spouse's services and property while they occupy separate dwellings.

Note: Throughout s. Tax 14.06, it has been assumed that a dissolved marriage was dissolved by a decree of divorce. Under s. 766.01(7), Stats., the dissolution of a marriage may also be by annulment or decree of invalidity, or by entry of a decree of legal separation or separate maintenance. The computation of household income, property taxes accrued and rent constituting property taxes accrued is the same under any of these types of dissolutions.

Note: Section Tax 14.06 interpretss. 71.52(5), (7) and (8) and 71.53(1) (c), Stats.