A tax question [Filing status - Which is better]

[jtelwood]

In which situations does it make sense to file married with separate returns rather than a joint return?

Thanks.

jte

[dbr]

When the tax cost is less.

Run tax software on both options and see what happens.

[FordBiggs]

Just be careful though, I heard that once you file as Married Joint, you can never go back to filing as Married Separate.

I'm not yet married so I don't have first hand experience with this but this is what was told to me so just be careful. Most of my coworkers who are married suggest to file Married separate because of this reason but I'm sure it's subjective based on your unique situation.

[MBMiner]

Just be careful though, I heard that once you file as Married Joint, you can never go back to filing as Married Separate.
[code][/code]
I'm not yet married so I don't have first hand experience with this but this is what was told to me so just be careful. Most of my coworkers who are married suggest to file Married separate because of this reason but I'm sure it's subjective based on your unique situation.

I suggest you talk to someone else about tax matters other than your coworkers. I'm afraid they're wrong. It is only in unusual circumstances where MFS makes sense.
Bruce

[HouseStark]

Just be careful though, I heard that once you file as Married Joint, you can never go back to filing as Married Separate.

I'm not yet married so I don't have first hand experience with this but this is what was told to me so just be careful. Most of my coworkers who are married suggest to file Married separate because of this reason but I'm sure it's subjective based on your unique situation.

As has been pointed out, that is incorrect. What probably got distorted somewhere along the way in what the OP heard is the rule that after a return has been filed with Married Filing Jointly for a given year, the MFJ return cannot be AMENDED to Married Filing Separately status after the due date for the original return. Returns originally filed as MFS can be amended to MFJ.

There is no rule against switching between MFJ and MFS in different years and it would rarely make sense.

And again, don't go to your coworkers for tax advice. I might, but I work at a CPA firm.

[jej]

In which situations does it make sense to file married with separate returns rather than a joint return?

Thanks.

jte

If your spouse is going to commit tax fraud, you may want to file separately.

[interplanetjanet]

In which situations does it make sense to file married with separate returns rather than a joint return?

When you live in Ohio. Sometimes.

Ohio is (somewhat) unique in that it penalizes MFS filers much less than most states do or the IRS does, but it requires the same filing status to be used at the state level as is used with the IRS. It's fairly common for tax preparers in Ohio to have to run things both ways to see if MFS can be beneficial.

In most of the rest of the USA this is less of an issue, and MFS is used more for when one spouse does not want to be on the hook for the other's taxes or wants to avoid a garnishment that the other spouse would be subject to (this is complex, also see the IRS' "injured spouse" filing provisions).

[LadyGeek]

This thread is now in the Personal Finance (Not Investing) forum (tax question). Also, I retitled the thread.

[mlipps]

In which situations does it make sense to file married with separate returns rather than a joint return?

When you live in Ohio. Sometimes.

Ohio is (somewhat) unique in that it penalizes MFS filers much less than most states do or the IRS does, but it requires the same filing status to be used at the state level as is used with the IRS. It's fairly common for tax preparers in Ohio to have to run things both ways to see if MFS can be beneficial.

In most of the rest of the USA this is less of an issue, and MFS is used more for when one spouse does not want to be on the hook for the other's taxes or wants to avoid a garnishment that the other spouse would be subject to (this is complex, also see the IRS' "injured spouse" filing provisions).

I didn't know this. My parents live in Ohio and I'm trying to convince them to file separately next year so my mom can get a full savers credit at 50% for a back door Roth.

[theduke]

In which situations does it make sense to file married with separate returns rather than a joint return?

When you live in Ohio. Sometimes.

Ohio is (somewhat) unique in that it penalizes MFS filers much less than most states do or the IRS does, but it requires the same filing status to be used at the state level as is used with the IRS. It's fairly common for tax preparers in Ohio to have to run things both ways to see if MFS can be beneficial.

In most of the rest of the USA this is less of an issue, and MFS is used more for when one spouse does not want to be on the hook for the other's taxes or wants to avoid a garnishment that the other spouse would be subject to (this is complex, also see the IRS' "injured spouse" filing provisions).

I didn't know this. My parents live in Ohio and I'm trying to convince them to file separately next year so my mom can get a full savers credit at 50% for a back door Roth.

Before you convince your parents to file separately on their federal return, you need to read Pub 17, page 21 Special Rules for filing MFS.

http://www.irs.gov/pub/irs-pdf/p17.pdf

[mlipps]

In which situations does it make sense to file married with separate returns rather than a joint return?

When you live in Ohio. Sometimes.

Ohio is (somewhat) unique in that it penalizes MFS filers much less than most states do or the IRS does, but it requires the same filing status to be used at the state level as is used with the IRS. It's fairly common for tax preparers in Ohio to have to run things both ways to see if MFS can be beneficial.

In most of the rest of the USA this is less of an issue, and MFS is used more for when one spouse does not want to be on the hook for the other's taxes or wants to avoid a garnishment that the other spouse would be subject to (this is complex, also see the IRS' "injured spouse" filing provisions).

I didn't know this. My parents live in Ohio and I'm trying to convince them to file separately next year so my mom can get a full savers credit at 50% for a back door Roth.

Before you convince your parents to file separately on their federal return, you need to read Pub 17, page 21 Special Rules for filing MFS.

http://www.irs.gov/pub/irs-pdf/p17.pdf

Thanks. I've read through things pretty thoroughly, and done a fake tax return for them this way, but I'll read through this again as well. They have no deductions at this time since the house is paid off and kids are grown, except the potential retirement savings contribution, so I think they come out ahead in my plan.

[FordBiggs]

I suggest you talk to someone else about tax matters other than your coworkers. I'm afraid they're wrong. It is only in unusual circumstances where MFS makes sense.
Bruce

Oops. Got it. I apologize to the OP for the incorrect information.

As has been pointed out, that is incorrect. What probably got distorted somewhere along the way in what the OP heard is the rule that after a return has been filed with Married Filing Jointly for a given year, the MFJ return cannot be AMENDED to Married Filing Separately status after the due date for the original return. Returns originally filed as MFS can be amended to MFJ.

There is no rule against switching between MFJ and MFS in different years and it would rarely make sense.

And again, don't go to your coworkers for tax advice. I might, but I work at a CPA firm.

I see. Thanks for the clarification. That makes sense on how my coworkers probably misinterpreted that information.

[jared]

It might make sense in some situations where taxpayer or spouse has a student loan that will be forgiven after a number of years of public service. The amount of the loan repayment can be tied to AGI, which could be substantially more for MFJ vs. MFS.

[sometimesinvestor]

I believe the classic situation has to do with large uncovered medical bills by one of the members of the couple(usually the one with lower earnings so that more of the medical bill can be deducted.
The IRS allows you to deduct qualified medical expenses that exceed 7.5 percent of your adjusted gross income for the year. Your adjusted gross income is your taxable income minus any adjustments to income such as deductions, contributions to a traditional IRA and student loan interest.

For example, if you have a modified adjusted gross income of $45,000 and $4,475 of medical expenses, you would multiply $45,000 by 0.075 (7.5 percent) to find that only expenses exceeding $3,375 can be deducted. This leaves you with a medical expense deduction of $1,100 (4,475 - 3,375).
Here is a link to an article on the subject
http://www.smartmoney.com/taxes/income/ ... heStreet_h

As noted one can use tax software to see if the numbers will work out

[Toons]

"Certain tax deductions and credits are forfeited to spouses when choosing to file separately including:
1) Child and Dependent Care Credit
2) College Tuition Deduction
3) American Opportunity Tax Credit
4) Student Loan Interest Deduction
5) Earned Income Tax Credit"


http://www.foxbusiness.com/personal-fin ... te-decide/