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Started By
Message
Married filing separate
Posted on 11/4/15 at 9:59 pm
Posted on 11/4/15 at 9:59 pm
This should be a pretty easy question for the board's resident tax experts. My wife and I both work and earn good salaries, however I've received a large windfall this year such that my earnings alone put us well into the top bracket. We plan to itemize this year for home mortgage interest, property taxes and sales taxes, which will likely be phased out by the 80% max. Given our disparity in earnings, would it make sense to file separate and have my wife take all the deductions? This is in TX... not sure how community property comes into play.
This post was edited on 11/4/15 at 10:07 pm
2
Posted on 11/4/15 at 10:10 pm to sneakytiger
What type of windfall?
Bonus? Raise? Inheritance?
Bonus? Raise? Inheritance?
Posted on 11/4/15 at 10:21 pm to Mr.Perfect
Bonus, it'll be on a w2
Posted on 11/5/15 at 8:52 am to sneakytiger
Likely not a good idea.
If she itemizes, you have to itemize. MFS standard deduction is half of the MFJ standard deduction.
Plus you would be putting all of the deductions on the lower bracket income.
MFS helps in only a few instances these days.
If she itemizes, you have to itemize. MFS standard deduction is half of the MFJ standard deduction.
Plus you would be putting all of the deductions on the lower bracket income.
MFS helps in only a few instances these days.
Posted on 11/5/15 at 9:37 am to sneakytiger
Unless you have a prenup, in Texas, those earnings including bonus are community property. So you would have to split it 50/50. In addition, either both of you would have to itemize or both of you wold have to take standard deduction.
The fact that you have to split the income likely precludes any benefit, but I've seen stranger. Run the numbers and see.
The fact that you have to split the income likely precludes any benefit, but I've seen stranger. Run the numbers and see.
Posted on 11/5/15 at 10:28 am to LSUFanHouston
Slight derailment of this thread. Why isn't a change from claiming income and deductions as community property to allocating them as separate property considered a change in accounting methods? A married couple can switch between methods whenever convenient and beneficial.
Posted on 11/5/15 at 1:16 pm to Poodlebrain
quote:
Why isn't a change from claiming income and deductions as community property to allocating them as separate property considered a change in accounting methods?
Filing status is not an accounting method. That would be my guess. I don't know if there is a specific thing out there stating that fact, but that's my guess.
Posted on 11/5/15 at 1:56 pm to LSUFanHouston
I don't think he is referring to the filing status exactly.
He's referring to a change that can be made from year to year while filing MFS.
He's referring to a change that can be made from year to year while filing MFS.
Posted on 11/5/15 at 3:03 pm to krehn11
quote:
He's referring to a change that can be made from year to year while filing MFS
When filing MFS:
If you are in a community state, absent a separate property agreement, everything gets split equally.
If you are in a non-community state, everything is allocated to the person who earned the income or incurred the expense.
I'm not aware of any way to switch between one treatment and the other treatment while staying in MFS. IRS has ruled that how you allocate is a manner of state law.
Posted on 11/5/15 at 3:07 pm to LSUFanHouston
Yeah - this is all above my head, ha ha. I just read his statement differently.
I'm a CPA in Iowa - never dealt with a community property state.
I'm a CPA in Iowa - never dealt with a community property state.
Posted on 11/5/15 at 3:25 pm to krehn11
quote:
I'm a CPA in Iowa - never dealt with a community property state
Ok, well if I have any questions about taxation of farm subsidies, I'm looking you up!!
Posted on 11/5/15 at 3:42 pm to LSUFanHouston
quote:
LSUFanHouston
Deal!
Posted on 11/5/15 at 6:49 pm to LSUFanHouston
That's what a feared. Thanks!
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