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Married filing Separately -- where to put shared items? CallMeZoot 02-02-2008
Posted by CallMeZoot on February 2, 2008, 4:00 pm
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 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.

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Posted by Mark Bole on February 2, 2008, 8:36 pm
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 CallMeZoot wrote:
> 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

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by D. Stussy on February 2, 2008, 10:00 pm
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> 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.

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by Mark Bole on February 2, 2008, 10:33 pm
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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

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by D. Stussy on February 3, 2008, 2:13 pm
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> 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.

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

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