I am a widower who remarried in October 2019. But we didn't start living together until March 2020. I paid no taxes on my social security in 2019, but over 50% of my social security became taxable in 2020. What is the logic for penalizing me for living with my wife?
You'll need to sign in or create an account to connect with an expert.
Ask your congressman. There are many filing rules that might not make sense.
Ask Congress - they passed the law. Do politicians need a reason or are reasonable?
Thanks for confirming what I already knew: I am being unreasonably penalized for living with my wife while MFS. BTW, we keep our finances separate so our children will not squabble over co-mingled inheritances.
Up to 85% of Social Security Retirement/Disability/Survivors benefits becomes taxable when all your other income plus 1/2 your social security reaches:
Why did you not file as Married Filing Jointly since you were legally married in 2020?
Because my wife wants to keep our finances separate.
@MaxJamison wrote:
Because my wife wants to keep our finances separate.
Then you will have to accept how the SS benefits are taxes when filing separately. You both also have use the Standard Deduction or you both have to use the itemized deductions when filing separately.
You didn't answer my question. What is the reasoning for penalizing me for filing married separately living together this year than married separately living apart last year? I don't get it.
MFS has many limitations and that is one of them. Filing a tax return does not mean your financed are combined - it is for tax purposes only. A rather expensive way to have separate returns.
If you file MFS (Married Filing Separately) keep in mind that there are several limitations to MFS. Married filing Jointly is usually the better way to file.
A few of those limitations are: (see IRS Pub 17 for the full list
https://www.irs.gov/pub/irs-pdf/p17.pdf page 21
1. Your tax rate generally is higher than on a joint return.
2. Your exemption amount for figuring the alternative minimum tax is half that allowed on a joint return.
3. You cannot take the credit for child and dependent care expenses in most cases, and the amount you can exclude from income under an employer's dependent care assistance you are legally separated or living apart from your spouse, you may be able to file a separate return and still take the credit. For more information about these expenses, the credit, and the exclusion, see chapter 32.
4. You cannot take the earned income credit.
5. You cannot take the exclusion or credit for adoption expenses in most cases.
6. You cannot take the education credits (the American opportunity credit and lifetime learning credit) or the deduction for student loan interest.
7. You cannot exclude any interest income from qualified U.S. savings bonds you used for higher education expenses.
8. If you lived with your spouse at any time during the tax year:
a. You cannot claim the credit for the elderly or the disabled, and
b. You must include in income a greater percentage (up to 85%) of any social security or equivalent railroad retirement benefits you received.
9. The following credits and deductions are reduced at income levels half those for a joint return:
a. The child tax credit,
b. The retirement savings contributions credit,
10. Your capital loss deduction limit is $1,500 (instead of $3,000 on a joint return).
11. If your spouse itemizes deductions, you cannot claim the standard deduction. If you can claim the standard deduction, your basic standard deduction is half the amount allowed on a joint return.
- If you live in a community property state you must allocate community income between both spouses..
-
- Community property states. If you live in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin and file separately, your income may be considered separate income or community income for income tax purposes. See Publication 555. http://www.irs.gov/publications/p555/index.html
See this TurboTax article for help with this.
https://ttlc.intuit.com/questions/1894449-married-filing-jointly-vs-married-filing-separately
https://ttlc.intuit.com/questions/1901162-married-filing-separately-in-community-property-states
We both itemize because it is to both of our benefits.
You're still not answering my question. WHY is this a MFS limitation? What is the logic? It makes no sense to me.
I already read that. But it doesn't say WHY.
Ask your congressman. There are many filing rules that might not make sense.
Ask Congress - they passed the law. Do politicians need a reason or are reasonable?
Thanks for confirming what I already knew: I am being unreasonably penalized for living with my wife while MFS. BTW, we keep our finances separate so our children will not squabble over co-mingled inheritances.
My understanding is that Married Filing Separately is intended to be used by couples that are living separately because their marriage is essentially over. Congress didn't want married couples that are together to "game the system" by filing MFS.
There are many such measures in place. The Kiddie Tax is another example, as it is intended to prevent parents from assigning income to their dependents just to take advantage of a lower tax rate.
@MaxJamison You might wish to see an attorney to explore other ways to achieve your goals, such as a Post Nup or Trust agreement.
@MaxJamison wrote:
Thanks for confirming what I already knew: I am being unreasonably penalized for living with my wife while MFS. BTW, we keep our finances separate so our children will not squabble over co-mingled inheritances.
Your tax returns are irrelevant in determining inheritances. State laws dictate what is to be included. If you live in a community property state then almost anything purchased or earned after marriage is already mingled.
If that is what you are trying to do then tax returns will not do it, you should see an estate planner and possibly setup trust accounts.
Still have questions?
Make a postAsk questions and learn more about your taxes and finances.
jyee315
Returning Member
mpiseter
Level 1
Loudspeaker1999
Level 1
millbemis
New Member
villalobosman
New Member
Did the information on this page answer your question?
You have clicked a link to a site outside of the TurboTax Community. By clicking "Continue", you will leave the Community and be taken to that site instead.