Married filing Separately -- where to put shared items?


C

CallMeZoot

After crunching some numbers I have figured out that it MIGHT work out
better if my wife and I file as "Married Filing Separately" (she has
several part time jobs which significantly under-withheld based on our
combined income).

We have a few shared items in both of our names, including:

-Mortgage Interest
-Property Taxes
-A small amount of 1099-misc income
-A small amount of savings interest

What are our options for these items when filing separately?
Specifically...

-Can we put them on whichever return we prefer (depending on what
works out to the least tax liabliity)?
-Can we "split them up" -- e.g. put half of the mortgage interest on
mine, half on hers? or in a 60/40, etc. split?
-Are there any regulations for how to divide them (e.g. do property
taxes and mortgage interest have to be on the same return?)
-Do we have to somehow document on one return that the "missing items"
are on the spouse's return?

Any advice would be appreciated.
 
Ad

Advertisements

M

Mark Bole

CallMeZoot said:
After crunching some numbers I have figured out that it MIGHT work out
better if my wife and I file as "Married Filing Separately" (she has
several part time jobs which significantly under-withheld based on our
combined income).
That alone is usually not enough to make MFS better than MFJ. How much
of an advantage does your initial estimate lead to? Are you losing
credits and subject to stricter limitations under MFS?
We have a few shared items in both of our names, including:

-Mortgage Interest
-Property Taxes
-A small amount of 1099-misc income
-A small amount of savings interest

What are our options for these items when filing separately?
Specifically...

-Can we put them on whichever return we prefer (depending on what
works out to the least tax liabliity)?
No. First, if you are in a community property state, special rules
apply -- in short, community income is split 50-50 regardless of who it
originated with. Second, income belongs to the person who either earned
it or owns the property which generated it, so that is what is reported
on each person's return. Third, deductions belong to the person who
owed the money and who actually paid it out of their own funds.
(Exceptions apply, but that's the general principle).
-Can we "split them up" -- e.g. put half of the mortgage interest on
mine, half on hers? or in a 60/40, etc. split?
-Are there any regulations for how to divide them (e.g. do property
taxes and mortgage interest have to be on the same return?)
-Do we have to somehow document on one return that the "missing items"
are on the spouse's return?
It would be a good idea.

-Mark Bole
 
D

D. Stussy

CallMeZoot said:
After crunching some numbers I have figured out that it MIGHT work out
better if my wife and I file as "Married Filing Separately" (she has
several part time jobs which significantly under-withheld based on our
combined income).

We have a few shared items in both of our names, including:

-Mortgage Interest
-Property Taxes
-A small amount of 1099-misc income
-A small amount of savings interest

What are our options for these items when filing separately?
Specifically...

-Can we put them on whichever return we prefer (depending on what
works out to the least tax liabliity)?
-Can we "split them up" -- e.g. put half of the mortgage interest on
mine, half on hers? or in a 60/40, etc. split?
-Are there any regulations for how to divide them (e.g. do property
taxes and mortgage interest have to be on the same return?)
-Do we have to somehow document on one return that the "missing items"
are on the spouse's return?

Any advice would be appreciated.
If you live in a "community property state" (there are 15 of them), then
your split is pretty much mandated at 50% each for every item mentioned per
state law.

Otherwise, the 1099-Misc income belongs to the ONE wh is the
sole-proprietor. The other items may be split as you see fit. By
indicating MFS and identifying your spouse, you've done all you need to do
regarding the "missing items" issue.
 
F

Frank S. Duke, Jr.

CallMeZoot at (e-mail address removed) wrote on 2/2/08 4:00 PM:
We have a few shared items in both of our names, including:

-Mortgage Interest
If you are both on the loan, allocate it any way you wish.
-Property Taxes
If you jointly hold title to the property, anyway you wish.
-A small amount of 1099-misc income
If self employment it should be whoever owns the business. If gambling
winnings, it should go with the gambler.
-A small amount of savings interest
If joint account it can go either way but you should report it under the SSN
that reported it to the IRS and then subtract it out with a comment
transferring it to the other SSN. Then report it on the other person's
return.
What are our options for these items when filing separately?
Specifically...

-Can we put them on whichever return we prefer (depending on what
works out to the least tax liabliity)? yes
-Can we "split them up" -- e.g. put half of the mortgage interest on
mine, half on hers? or in a 60/40, etc. split? yes
-Are there any regulations for how to divide them (e.g. do property
taxes and mortgage interest have to be on the same return?) no
-Do we have to somehow document on one return that the "missing items"
are on the spouse's return?
Yes, if they were reported to the IRS on a 1099 type form. The IRS will
look for them where reported.

All freely provided advice guarantee correct or double your money back

Frank S. Duke, Jr. CPA
Cincinnati, OH USA
 
M

Mark Bole

D. Stussy wrote:
[...]
If you live in a "community property state" (there are 15 of them), then
your split is pretty much mandated at 50% each for every item mentioned per
state law.
Wrong, there are nine. See Pub 555.

-Mark Bole
 
B

Bob Sandler

If you live in a "community property state" (there are 15 of them)

1. Arizona
2. California
3. Idaho
4. Louisiana
5. Nevada
6. New Mexico
7. Texas
8. Washington
9. Wisconsin

What are the other 6?

Bob Sandler
 
D

D. Stussy

Mark Bole said:
D. Stussy wrote:
[...]
If you live in a "community property state" (there are 15 of them), then
your split is pretty much mandated at 50% each for every item mentioned per
state law.
Wrong, there are nine. See Pub 555.
Brain freeze here. You're right. I was thinking of "common law" states -
of which there are 15.
 
M

Mark Bole

Frank said:
CallMeZoot at (e-mail address removed) wrote on 2/2/08 4:00 PM:
We have a few shared items in both of our names, including: [...]
-Can we put them on whichever return we prefer (depending on what
works out to the least tax liabliity)?
-Can we "split them up" -- e.g. put half of the mortgage interest on
mine, half on hers? or in a 60/40, etc. split?
-Are there any regulations for how to divide them (e.g. do property
taxes and mortgage interest have to be on the same return?)
The first problem with this is, since information on MFS returns is not
necessarily available to the other spouse, how could one arbitrarily
split up income and deductions and ensure they are not double-reported?

See Table 1 in Pub 504 (page 5, for 2007 tax year). There are indeed
rules for dividing Schedule A deductions on MFS returns.

-Mark Bole
 
Ad

Advertisements

A

Alan

D. Stussy said:
Mark Bole said:
D. Stussy wrote:
[...]
If you live in a "community property state" (there are 15 of them), then
your split is pretty much mandated at 50% each for every item mentioned per
state law.
Wrong, there are nine. See Pub 555.
Brain freeze here. You're right. I was thinking of "common law" states -
of which there are 15.
If we want to get technical... the National Conference of State
Legislatures says:

"Currently, only 10 states (Alabama, Colorado, Kansas, Rhode
Island, South Carolina, Iowa, Montana, Oklahoma, Pennsylvania and
Texas) and the District of Columbia recognize common-law
marriages contracted within their borders. In addition, five
states have "grandfathered" common law marriage, allowing those
established before a certain date to be recognized. New Hampshire
recognizes common law marriage only for purposes of probate, and
Utah recognizes common law marriages only if they have been
validated by a court or administrative order."
 

Ask a Question

Want to reply to this thread or ask your own question?

You'll need to choose a username for the site, which only take a couple of moments. After that, you can post your question and our members will help you out.

Ask a Question

Top