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Posted by Alan on June 13, 2008, 11:53 pm
Please log in for more thread options Arthur Kamlet wrote:
>> Arthur Kamlet wrote:
>>>> The tax rules state that 'generally' payment of the prior year actual
>>>> taxes will preclude an underpayment penalty.
>>>>
>>>> How about a situation where an individual filed a MFJ return in 2007
>>>> (joint because spouse died in 2007.) 2007 actual taxes were low (less
>>>> than $1,000.) Individual has paid in (by applying 2007 refund to
>>>> 2008 taxes) well in excess of this, but less than half of 2008
>>>> estimated tax liability. Individual will be filing as single in 2008.
>>>> Will anything in this situation negate the use of "paid in prior year
>>>> taxes" as an underpayment exception?
>>>
>>> The procedure (there may be others, but this is known to be an
>>> acceptable one) is to allocate the 2007 tax to each spouse.
>>>
>>> Many software packages allow you to easily generate 2 MFS returns out
>>> of a MFJ return.
>>>
>>>
>>> If the two MFS returns result in less tax, as happens often in Ohio,
>>> the two MFS returns get filed.
>>>
>>> But in this case, the two MFS returns might generate more tax.
>>> No matter.
>>>
>>>
>>> Just add the tax together from the two MFS returns, and determine
>>> the percent of the total MFS tax represented by the taxpayer, and
>>> apply that percent to the joint return.
>>>
>>>
>>> Example:
>>>
>>> Using hypothetical 2007 return.
>>>
>>> MFJ total tax = $4000
>>>
>>> MFS total tax = $5000, Taxpayer=3000, Spouse=2000
>>>
>>> So had they filed separately Taxpayer's tax was 60%
>>>
>>> 60% x 4000 = $2400
>>>
>>> Use $2400 for 2007 tax when determining 2008 Form 2210 amount.
>> The allocation of prior year taxes is done by preparing two
>> married separate tax returns; totaling the taxes on the two
>> returns; and computing the percentage of the total tax for each
>> taxpayer. This percentage is then applied to the actual taxes
>> paid on the joint return to obtain each spouse's share.
>>
>> There is an example of the above in IRS Pub 505.
>
>
> I think you confirmed what I said, but in fewer words.
I replied from a remote computer using a different ISP and your
reply on the newsgroup was truncated. I never saw the bottom half
of your reply.
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