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Can the impact of 1099-k income be reduced by changing filing status?

My husband recently started selling items on ebay and received notice that he'll be receiving a 1099-k. He's not self-employed and he doesn't work. Will it be beneficial to file our taxes as married filing separately to reduce the impact of the 1099-k income? 

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2 Replies

Can the impact of 1099-k income be reduced by changing filing status?

No.  The filing status doesn't matter.  What is he selling?  It may be self employment income.  He doesn't have to have a business set up.  

Unless you have a specific reason to file separate returns,

It is usually better to file Joint. Joint has the lowest tax rates and the highest Standard Deduction.   And if you are in a Community Property state MFS gets tricky to figure out.  Here's some things to consider about filing separately……

 

In the first place you each have to file a separate return, so that's two returns.  And if you are using the Online version that means using 2 accounts and paying the fees twice.  

 

Many people think they come out better when filing Married Filing Separate but they are probably doing it wrong.  If one person itemizes deductions on Schedule A then the other one must itemize too, even if it's less than the standard deduction, even if it is ZERO!  (Business expenses are not itemized deductions.  Business goes on Schedule C not A.)

 

And there are several credits you can't take when filing separately, like the

EITC Earned Income Tax Credit

Child Care Credit

Educational Deductions and Credits

 

And contributions to IRA and ROTH IRA are limited when you file MFS.

 

Also if you file Married Filing Separately up to 85`% of your Social Security becomes taxable right away even with zero other income.

 

See …….

https://ttlc.intuit.com/community/married/help/is-it-better-for-a-married-couple-to-file-jointly-or-...

 

Can the impact of 1099-k income be reduced by changing filing status?

He's selling Pokemon cards that we bought 20 years ago when my son was little. 

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