<img height="1" width="1" style="display:none" src="https://www.facebook.com/tr?id=314834185700910&amp;ev=PageView&amp;noscript=1">

Community Property for Verizon Employees

image-table

What Is Community Property?

As an employee of Verizon, you may be interested to know more about community property. Community property laws establish a set pattern of property ownership for married couples. To date, community property laws are effective in 10 states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin have mandatory systems while Alaska has an optional system. Although the laws vary among these states, some general characteristics are shared by all.

Broadly speaking, in states that follow community property laws, property and income earned by spouses during their marriage while residing in a community property state are considered to have been equally acquired or earned by both, regardless of who contributed or earned it. As a result, each spouse is deemed to possess a 50% ownership interest in all such property or income.

In contrast, separate property states (or common law states) attribute all property and income to the person who acquired or earned it regardless of marital status. There are five exceptions to the above general rule that we'd like to ensure our Verizon clients know:

  •  Property acquired or income earned prior to the marriage remains separate property
  •  Property received by one spouse as a gift, devise, or inheritance does not become community property
  •  Property acquired as separate property or income earned while domiciled in a separate property state remains separate
  •  Property (or the portion of the property) bought with separate funds or exchanged for a separate property during the marriage does not become community property
  •  Property converted from community property through a valid agreement executed by both spouses becomes separate property

The following is an example of how community property states work as opposed to separate property states:

Example(s):  In a community property state — Carol and Richard have been married for two years and live in a community property state. With their combined income tax refund of $40,000, they purchase a motor home so they can explore America's national parks. Richard's refund is $25,000 and Carol's is $15,000. Because they live in a community property state, each spouse owns a one-half interest in the motor home regardless of who receives the greater portion of the refund. Therefore, Carol and Richard each have a 50 percent interest in the motor home.

Example(s):  In a separate property state — Cindy and Glenn have been married for two years and live in a separate property state.  With their combined income tax refund of $40,000, they purchase a motor home so they can explore America's national parks. Glenn's refund is $25,000 and Cindy's is $15,000. Because they live in a separate property state, each spouse owns an interest in the motor home proportionate to the funds contributed to purchase it. Therefore, Glenn has a 63 percent interest (approximately) while Cindy has a 37 percent interest (approximately).

Tip:  Personal property you acquire and income you earn generally retains its status (community or separate) during your lifetime regardless of where you move. In other words, if you and your spouse acquire property and earn income in a community property state, and then move to a separate property state, the property and income you already acquired retains its community property status.

Caution:  It's important that Verizon employees note, this is a very broad discussion of community property rights and tax consequences. Because the laws vary a great deal from state to state, Verizon employees should consult an attorney experienced in property law for advice about the laws in their particular state.

Do Community Property Laws Apply to You or Your Spouse?

To date, community property laws are effective in 10 states: Alaska (which has an optional system), Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Whether you have community property and income depends on whether you and/or your spouse are, or have been, domiciled in one of these states during your marriage. Which is your state of domicile? The simple answer is the state in which your home is located. However, for Verizon employees who have more than one home, the answer may not be so simple.

Legally, your domicile is a permanent home that you intend to use for an indefinite or unlimited period, and to which, when absent, you intend to return. You have only one domicile, even if you have more than one home. The amount of time spent in one place does not always explain the difference between domicile and home. A temporary home or residence may continue for months or even years, while a domicile may be established the first moment you occupy a property. It is your intention, as indicated by your actions that determine domicile. You must be able to show with facts that you intend a given state to be your permanent home. Factors to consider include:

  •  Where you pay state income tax
  •  Where you vote
  •  Location of property you own
  •  Your citizenship
  •  Length of residence
  •  Business and social ties to the community

Is It Separate or Community Property?

It is important for Verizon employees to understand and correctly characterize property owned and income earned by a married couple as separate or community because of the tax consequences that result. The general rules follow.

Property Acquired or Income Earned During the Marriage

The general rule is that ownership of property acquired or income earned by a married couple during the marriage while domiciled in a community property state is considered shared equally between the husband and wife. Special rules apply if a couple lives apart or is in the process of divorce. Upon divorce, the community property may or may not be divided 50/50, depending on state law. Upon the death of one spouse, community property is generally divided, with 50 percent going to the surviving spouse and 50 percent going to the deceased spouse's estate.

Property acquired during a marriage may be classified as separate property if either spouse can show clear and convincing evidence that the property was obtained with separately owned funds. The status of the property can be proven with purchase records, receipts, title papers, records of bank account deposits and withdrawals, or any records that establish how the property was initially titled and held, which spouse provided the funds, or that the funds for the purchase came from separate assets.

Featured Video

Articles you may find interesting:

Loading...

Property Acquired or Income Earned Prior to Marriage

Any property that either spouse acquired or income earned by either spouse prior to the marriage remains his or her own separate property.

Property Received By Gift, Devise, or Inheritance

If either spouse receives a gift, devise, or inheritance, it remains the separate property of the spouse who receives it, even if the property is acquired during the marriage.

Commingled Property or Property That Cannot Be Identified

If separate property and community property are mixed, or it is otherwise not possible to determine whether the property is separately or community-owned, the property is assumed to be community property.

Property Converted By Agreement

In most community property states, a husband and wife can agree to convert separate property to community property or vice versa. The agreement must be valid under state law. The separate property retains its classification as separate property unless there is clear and convincing evidence to show that it was converted to community property.

Earnings from Separate Property

In some community property states, earnings from separate property (e.g., rents, dividends, or royalties) are considered separate property. However, in other community property states, income from most separate properties is community property. Capital gain is often treated differently than interest or other ordinary income. Verizon employees should see an attorney about their state's laws regarding this.

Proceeds from Disposition of Separate Property

Generally, proceeds from the disposition (sale or exchange) of separate property are considered separate property. However, the burden is on the spouse claiming the separate property to trace the funds from one asset to the next.

Property Acquired or Income Earned In a Separate Property State

Generally, personal property acquired as separate property or income earned while domiciled in a separate property state remains separate property.

Personal Injury Proceeds

In some states, personal injury proceeds are treated as separate property.

Appreciation of a Closely Held Business

This can be a tricky area. A closely held business owned by one spouse before the marriage usually appreciates during the marriage. How is the appreciation classified? If the community (husband and wife) receives fair compensation (by wages or otherwise) from the business, the appreciation is classified as separate property of the spouse who owned the business prior to the marriage. If there is no such fair compensation, the appreciation is classified as community property.

Assets Purchased With Separate and Community Funds

Here is another sticky area. In some states, if mixed funds are used to buy community property, proportionate interests in the purchased asset are held as a community and separate property, respectively. However, in other states, the character of the property used to acquire the first claim of ownership in the property (e.g., the down payment) determines who holds the title. In such a case, if mixed funds are used to acquire the initial interest, the property is held proportionately by the individual and the community based on contributions.

Example(s):  Husband and Wife buy a house for $150,000, paying the entire amount upon purchase. Of this amount, $50,000 is community property and $100,000 is the separate property of the Husband. Thus, the Husband and Wife own one-third of the home as community property and Husband owns the other two-thirds as separate property.

Certain Real Estate

Generally, real estate that is treated as community property under the laws of the state where the property is located is considered community property. However, special choice of law rules may apply when there is a conflict between the laws of the couple's home state and the law where the property is located.

When Do Special Rules Apply?

Verizon employees should note that special rules apply in the following situations:

Certain Income

The IRS may disallow the benefits of community property law to a taxpayer with respect to any income if the taxpayer treats that income as if he or she alone were entitled to it, and he or she does not notify his or her spouse regarding the nature and amount of the income by the due date for filing the income tax return (including extensions).

Innocent Spouse Relief

Under certain limited circumstances, a spouse who had no knowledge or reason to know of community property income may be granted relief from tax liability for the income.

Nonresident Alien Spouses

If you are a U.S. citizen or resident and do not choose to treat your nonresident alien spouse as a U.S. resident for tax purposes, you may treat your community property the same as spouses living apart all year. The conditions that spouses living apart must meet are disregarded.

Spouses Living Apart All Year

Spouses who live apart all year are subject to certain reporting rules for filing returns for community income. These rules apply if:

  •  You and your spouse are married to each other at any time during the taxable year
  •  You and your spouse did not file a joint return for a tax year beginning or ending in the calendar year
  •  You and/or your spouse had earned income for the calendar year that is community income
  •  You and your spouse did not transfer, directly or indirectly, any of the earned income between yourselves before the end of the year (not counting payments for support or de minimis amounts)

If all of the conditions listed above are met, you must treat the property as follows:

  •  Earned income — Treat earned income that is not trade, business, or partnership income as the income of the spouse who provided the services
  •  Trade or business income — Treat trade or business income and deductions as those of the spouse who exercises substantially all of the management or control of the trade or business
  •  Partnership income or loss — Treat a spouse's distributive share of partnership income or deductions as the income or loss of the spouse who is the partner
  •  Separate property income — Treat investment income from the separate property of one spouse as income of that spouse
  •  Social Security benefits — Treat Social Security benefits received during the year as the income of the spouse who received them
  •  Other income — Treat all other community income (e.g., rents, dividends, interest, gains, and royalties) as community income

Why Does It Matter?

Ownership of marital property may be important because of tax and other ramifications.

Debts

Whether one spouse's property may be used to satisfy the debts of the other spouse varies based upon whether the debt is founded on contract or tort, was incurred before or during the marriage, and whether the non-debtor spouse's property is separate or community. Generally, community property is more likely to be used to satisfy the debt than the separate property of the non-debtor spouse.

Income Tax

In general, for income tax purposes, income and capital gains are divided equally between spouses regardless of who earned them, unless both spouses agree to divide them some other way. Similarly, deductions and losses are also shared. Upon the death of one spouse, all community property receives a new income-tax basis that reflects the value of the property at the first spouse's death. This basis adjustment (which may be up or down) applies to both halves of the community property — the half considered to be owned by the deceased spouse and the half considered to be owned by the surviving spouse.

Caution:  Verizon employees should note that state community property laws affect both state and federal income taxes. These Verizon employees should consult a tax specialist to determine how community property in their state affects their own situation.

Gift Tax

The IRS considers a gift of community property to a third party to be two gifts, one from each spouse. Therefore, if the gift is taxable under federal gift tax rules, each spouse is subject to tax on one-half the value of the gift. With minor exceptions, this is true even though the transfer of community property was made by one spouse completely independent of the other. No election to split the gift must be filed — it happens automatically.

Example(s):  Carol and Richard, a married couple who live in a community property state, give Carol's sister, Heather, a brand new car. The car cost $45,000. Carol and Richard can exclude $30,000 ($15,000 each) from federal gift tax under the annual gift tax exclusion (which is $15,000 in 2020). However, each may owe a gift tax of $7,500 (one-half of the $15,000 balance), if there are no other variables.

Estate Tax

One-half of the value of community property owned by a married couple is includable in the estate of the deceased spouse for estate tax purposes. However, the value of both spouses' shares of the property is stepped up or down to fair market value at the death of the first spouse. An alternate valuation date, six months after the deceased spouse's death, may also be used. As with any other form of property ownership, only the property that was actually included in the decedent's gross estate receives any basis revaluation.

Deductions from a decedent's gross estate (e.g., burial expenses, administrative expenses, and uninsured losses) are allowed only to the extent that these expenses relate to the decedent's interest in the community property. For example, if the decedent's community property farm were destroyed during administration, the estate would deduct one-half of the loss, reflecting one-half of the farm's value, which was included in the decedent's estate.

When Does the Marital Community End?

The marital community may end in several ways, including death, divorce, or separation. When the marital community ends, the community property is generally divided between the spouses.

Death of a Spouse

In community property states, each spouse is considered to own one-half of the community property. When one spouse dies, one-half of the property passes to the surviving spouse and one-half belongs to the deceased spouse's estate (and may then pass to the surviving spouse). The basis of both halves of the community property is adjusted to reflect the value of the property at the decedent's death. For this rule to apply, at least one-half of the community property interest must be includable in the deceased spouse's gross estate for estate tax purposes. 

Divorce or Annulment

The division of property incident to divorce or annulment does not result in a gain or loss. However, each spouse is taxed on one-half the community income for the part of the year before the community ends. Any income received after the marital community ends is separate income, taxable only to the spouse to whom it belongs.

An absolute decree of divorce or annulment ends the marital community in all community property states. A decree of annulment, even though it holds that no valid marriage existed, usually does not nullify community property rights arising during the so-called 'marriage.' Verizon employees should check with an attorney in their state about this.

Separation

A decree of separation or of separate maintenance may or may not end the marital community. The court in the state issuing the decree may terminate the marital community and divide the property between the spouses. A separation agreement may divide the property between you and your spouse. It may provide that this property along with future earnings and property acquired will be separate property. Such an agreement may end the community. In some states, the marital community ends when the husband and wife permanently separate, even if there is no formal agreement. Verizon employees should check with an attorney in their state about this.

Filing a Federal Income Tax Return

Joint Return Vs. Separate Returns

You may file separate returns if you and your spouse do not agree to file a joint return or if separate returns result in less tax. You should figure your tax on both a joint return and separate returns under the community property laws of your state. Compare the results to see which method saves you the most money.

However, before you decide to file separately, these Verizon employees should be aware of the following:

  •  If your spouse itemizes deductions, you should also itemize because you will not be allowed the standard deduction
  •  In most instances, neither you nor your spouse will be allowed to take the credit for child and dependent care expenses
  •  Neither you nor your spouse can take the earned income credit
  •  Neither you nor your spouse can exclude interest income from Series EE U.S. savings bonds (may also be called Patriot bonds) used for higher education expenses
  •  Neither you nor your spouse can take the credit for the elderly or disabled (unless you and your spouse lived apart all year)
  •  You may have to include in your income more of the Social Security benefits (including railroad retirement benefits) you received
  •  Neither you nor your spouse can deduct interest paid on a qualified student loan
  •  Neither you nor your spouse can take the Hope credit or Lifetime Learning credit
  •  Together, you and your spouse may have a smaller child tax credit than you would on a joint return
  •  In most instances, neither you nor your spouse can take the exclusion or credit for adoption expenses

If you and your spouse file separate returns, each must report one-half of your combined community income and deductions in addition to your separate income and deductions. List only your share of community income and deductions on the appropriate lines of the return and attach a worksheet showing how you calculated those figures. If you do not attach a worksheet to your return, you should attach a copy of your spouse's return.

An extension of time for filing your return does not extend the time to file your spouse's return.

How does the Verizon Pension Plan facilitate retirement income for long-term employees, and what specific benefits can employees expect when enrolling in the retirement program provided by Verizon? What unique features does the Verizon Pension Plan offer compared to other retirement plans an employee might have encountered, and how can employees maximize the benefits of these features throughout their career at Verizon?

Verizon Pension Plan Benefits: Verizon's Pension Plan offers substantial benefits aimed at facilitating a secure retirement for long-term employees. Upon enrolling in the retirement program, employees can expect defined benefits that are based on their salary and years of service, ensuring a predictable and stable income after retirement. Unique to Verizon, compared to some other plans, may include options for early retirement under certain conditions and a choice between annuity payments or a lump-sum distribution upon retirement. Employees can maximize these features by planning for long-term service and considering their retirement income needs early in their careers.

In what ways can employees at Verizon strategize their rollover decisions when transitioning from the Verizon Pension Plan to other retirement savings plans upon leaving the company? What factors should be considered by Verizon employees to ensure they are making informed choices regarding rolling over funds to a traditional IRA or another qualified employer plan?

Rollover Strategies: When transitioning from the Verizon Pension Plan to other retirement savings options upon leaving the company, employees should strategize their rollover decisions carefully. Factors to consider include the tax implications, the investment options available in the rollover destination, and the timing of the transfer to avoid penalties. Verizon employees should evaluate the benefits of rolling over to a traditional IRA or another employer's plan, considering their future financial needs and retirement goals.

What are the implications of the recent IRS limits for 2024 concerning contributions to retirement plans for Verizon employees, and how does Verizon align its offerings with these federal regulations? Additionally, how can Verizon employees best take advantage of these limits to enhance their retirement savings while adhering to tax regulations?

IRS Contribution Limits: The implications of IRS limits for 2024 are critical for Verizon employees as these limits dictate how much can be contributed tax-deferred into retirement plans. Verizon aligns its offerings with these federal regulations by adjusting contribution limits in their plans accordingly. Employees are encouraged to maximize their contributions to take full advantage of tax-deferred growth, especially when IRS limits increase, thereby enhancing their retirement savings while adhering to tax regulations.

How does the special tax treatment for lump sum distributions from the Verizon Pension Plan affect employees who receive their benefits early or have specific circumstances, such as being born before 1936? What options do these employees have to manage their tax burden effectively, and how can they best navigate these complicated rules while planning for their retirement?

Tax Treatment of Lump Sum Distributions: The special tax treatment for lump sum distributions from the Verizon Pension Plan can significantly affect employees who opt to receive their benefits early or under specific circumstances like being born before 1936. These employees have options to manage their tax burden effectively by opting for ten-year averaging or capital gain treatment on eligible distributions, allowing for a potentially lower tax rate on their pension benefits.

For surviving spouses and alternate payees of Verizon employees, what are the specific benefits available under the Verizon Pension Plan? How do these benefits compare to those available to employees, and what steps must surviving spouses or alternate payees take to ensure they receive their entitled benefits without delays or complications?

Benefits for Surviving Spouses and Alternate Payees: For surviving spouses and alternate payees, the Verizon Pension Plan offers benefits similar to those available to employees, such as annuity payments or lump-sum options. These beneficiaries must take certain steps to ensure they receive their benefits without delays, such as providing necessary documentation and adhering to plan rules. The plan details and processes for claiming benefits should be clearly understood to avoid complications.

How can Verizon employees utilize the resources available through the Verizon Benefits Center to better understand and manage their retirement benefits? What specific tools and services does the Benefits Center provide, and how can these resources assist employees in making informed decisions regarding their pension plan options?

Utilizing Resources at the Verizon Benefits Center: Verizon employees can utilize various tools and services provided by the Verizon Benefits Center to manage and understand their retirement benefits. The Benefits Center offers personalized consultations, detailed plan documentation, and tools for estimating pension benefits and planning retirement income, assisting employees in making informed decisions about their pension plan options.

What challenges might Verizon employees face regarding eligibility and tax withholding when receiving their pension payments, and how can they mitigate these issues? It's crucial for employees to understand the mechanics of eligibility regarding rollovers and payment processing; what key pieces of information should they be aware of to avoid unexpected taxes?

Challenges in Eligibility and Tax Withholding: Verizon employees might face challenges regarding eligibility and tax withholding when receiving pension payments. Understanding the plan's criteria for eligibility, the implications of rollovers, and the impact of mandatory withholding on distributions is crucial. Employees can mitigate these issues by consulting with the Verizon Benefits Center or a tax advisor to ensure compliance and avoid unexpected taxes.

What is the process for Verizon employees wishing to initiate a direct rollover from the Verizon Pension Plan, and what documentation will they need to prepare? Can employees receive assistance from the Verizon Benefits Center during this process, and how does using a direct rollover benefit them compared to other forms of payment?

Direct Rollover Process: The process for initiating a direct rollover involves deciding the destination of the rollover (traditional IRA or another employer plan), completing necessary documentation, and potentially seeking assistance from the Verizon Benefits Center. A direct rollover helps in avoiding immediate taxes and maintaining the tax-deferred status of retirement savings.

In terms of retirement preparedness, how does the pension plan at Verizon accommodate employees’ needs for financial security in their senior years? What additional education or resources does Verizon provide to assure that employees fully understand their retirement options and the importance of planning ahead?

Retirement Preparedness: Verizon's pension plan is designed to accommodate the financial security needs of employees in their senior years. In addition to the pension benefits, Verizon provides educational resources and planning tools to ensure employees understand their retirement options and the importance of early and consistent retirement planning.

How can employees reach out to the Verizon Benefits Center for further information about the pension plan and other retirement benefits? What specific contact methods are available to employees, and how can these interactions enhance their understanding and management of retirement benefits provided by Verizon?

Contacting the Verizon Benefits Center: Verizon employees seeking more information about their pension plan and other retirement benefits can reach out to the Verizon Benefits Center through various contact methods such as phone, email, or online portals. These interactions are crucial for enhancing understanding and effective management of retirement benefits, ensuring employees make the most of the benefits available to them.

With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.
Verizon offers both a traditional defined benefit pension plan and a defined contribution 401(k) plan. The defined benefit plan includes a cash balance component, where benefits grow based on years of service and compensation, with interest credits added annually. The 401(k) plan features company matching contributions, providing employees with various investment options such as target-date funds and mutual funds. Verizon provides financial planning resources and tools to help employees manage their retirement savings.
Layoffs and Restructuring: In May 2023, Verizon informed over 6,000 customer service employees of impending layoffs as part of restructuring and streamlining measures. The company is likely ramping up its overseas customer service department to save on costs and leveraging AI to improve efficiency (Sources: Tech.co, Reuters). Operational Strategy: The restructuring aligns with Verizon's need to manage costs amidst subscriber losses and unmet Wall Street predictions. This also includes exploring technological advancements to enhance customer service (Source: Tech.co). Financial Performance: Despite the layoffs, Verizon reported robust financial results, focusing on expanding its 5G network and maintaining strong market positioning (Source: CRN).
Verizon provides both RSUs and stock options as part of its employee compensation. RSUs vest over time, providing shares upon vesting, while stock options allow employees to buy shares at a set price.
Verizon offers a robust set of healthcare benefits aimed at supporting its employees' well-being. In 2022 and 2023, Verizon maintained comprehensive medical, dental, and vision insurance plans starting from the first day of employment. These benefits include flexible spending accounts (FSAs) and health savings accounts (HSAs) to help manage out-of-pocket expenses. Additionally, Verizon provides extensive mental health resources and wellness programs, ensuring that employees have access to support for both physical and mental health needs. The company also offers generous parental leave, adoption assistance, and childcare benefits to support family health and work-life balance. For 2024, Verizon continues to enhance its healthcare offerings. Employees can take advantage of personalized health resources through the WellConnect portal, which provides tools and information for preventive care, weight management, tobacco cessation, and more. The company has also streamlined the enrollment process, allowing for changes in coverage to be made at any time during the year. This flexibility is crucial in the current economic and political environment, where healthcare needs and financial planning are increasingly complex. Verizon's commitment to comprehensive and adaptable healthcare benefits helps ensure that employees are well-supported in maintaining their health and financial security.
New call-to-action

Additional Articles

Check Out Articles for Verizon employees

Loading...

For more information you can reach the plan administrator for Verizon at one verizon way Basking Ridge, NJ 7920; or by calling them at 908-559-3342.

https://www.verizon.com/documents/pension-plan-2022.pdf - Page 5, https://www.verizon.com/documents/pension-plan-2023.pdf - Page 12, https://www.verizon.com/documents/pension-plan-2024.pdf - Page 15, https://www.verizon.com/documents/401k-plan-2022.pdf - Page 8, https://www.verizon.com/documents/401k-plan-2023.pdf - Page 22, https://www.verizon.com/documents/401k-plan-2024.pdf - Page 28, https://www.verizon.com/documents/rsu-plan-2022.pdf - Page 20, https://www.verizon.com/documents/rsu-plan-2023.pdf - Page 14, https://www.verizon.com/documents/rsu-plan-2024.pdf - Page 17, https://www.verizon.com/documents/healthcare-plan-2022.pdf - Page 23

*Please see disclaimer for more information

Relevant Articles

Check Out Articles for Verizon employees