Trying to get some clarification on deduction splitting between spouses when filing separately. I've looked at other questions about this but the answers are all over the place.
Lets just use mortgage interest as an example.
Both of our names are on the mortgage, it is paid out of a joint account. I am listed on the mortgage as the primary.
1. Do we have to split this 50/50 or can it be all applied to just one of us or any other ratio?
2. If it can all be applied to just a single person, does the other person still need to input the information into the form and just say the amount is ZERO?
3. Does the above in 1 & 2 apply for anything else we have jointly in our names (PMI, property taxes, personal property taxes)
4. How does this affect home office deductions? If I apply X amount of the home deductions to me, I assume I put only those amounts into the home office deduction part correct?
Anything else one should know about doing this I am overlooking or missing?
When filing separately, you can divide the deductions in any way that is reasonable to both of you. Generally, person-specific deductions like medical expenses, state income tax, and employee expenses should be claimed by the person who incurred or paid them. General marital obligations like mortgage and property tax are often split by who paid which share, but there is no black letter rule. If you want to say that one spouse paid the mortgage and the other spouse bought the food and paid other expenses, so that spouse one claims all the mortgage, that is usually ok. Just be sure that you don't claim more than the total between you, and remember that if one spouse itemizes, both spouses must itemize even if their total is less than the standard deduction would be.
When filing separately, you can divide the deductions in any way that is reasonable to both of you. Generally, person-specific deductions like medical expenses, state income tax, and employee expenses should be claimed by the person who incurred or paid them. General marital obligations like mortgage and property tax are often split by who paid which share, but there is no black letter rule. If you want to say that one spouse paid the mortgage and the other spouse bought the food and paid other expenses, so that spouse one claims all the mortgage, that is usually ok. Just be sure that you don't claim more than the total between you, and remember that if one spouse itemizes, both spouses must itemize even if their total is less than the standard deduction would be.
thank you all. I believe I have done this correctly now. It seems in our case it is quite beneficial to file separately vs jointly.
Could be. Almost never, but could be. There were a few years when it was better for my wife and I to file separately in New York because we lost money on federal but gained more back on state, because of the way the state brackets worked.
Kind of what to revisit this as I still feel I'm missing something here. I've entered our tax information numerous times as joint filing and then as separate. Anything in both of our names (ie mortgage stuff, donations, etc) I applied to myself and not my wife as I make a lot more money. Anything that was only listed in one of our names went to that return only. We both itemize. What is concerning me is the drastic reduction in federal taxes owed if I file separately vs jointly. I am talking $1000 dollars less. All the items are accounted for 100% between both of us. Nothing is left out either way I do it. If worst case scenario is the IRS finds a problem and tells me to pay the difference owed, then I have no problem but I assume they'll screw me hard for more money than just what I messed up based on some unknowns that I would never understand.
Make sure that both tax returns use itemized deductions. If you itemize, your spouse must also itemize even if their itemized deductions are less than the standard deductions. This is the most common error when filing separately. In the personal interview when selecting married filing separately, there should be a question "is your spouse itemizing?"
Why are you filing separate returns? Married filing separately is the worst way to file.
Married Filing Jointly is usually better, even if one spouse had little or no income. When you file a joint return, you and your spouse will each receive the $4050 personal exemption, plus the married filing jointly standard deduction of $12,600 (add $1250 for each spouse over the age of 65). You are eligible for more credits including education credits, earned income credit, child and dependent care credit, and a larger income limit to receive the child tax credit.
If you choose to file married filing separately, both spouses have to file the same way—either you both itemize or you both use standard deduction. Your tax rate will be higher than on a joint return. Some of the special rules for filing separately include: you cannot get earned income credit, education credits, or deductions for student loan interest. A higher percent of your Social Security benefits may be taxable. In many cases you will not be able to take the child and dependent care credit. If you live in a community property state, you will be required to provide additional information regarding your spouse’s income. If you are using online TurboTax to prepare your returns, you will need to prepare two separate returns and pay twice
Also we have no dependents. we don't earn any extras from earned income. Not on SS.
Then you and your spouse can divide the itemized deductions the way you choose to, as long as each of you itemizes, and the way you split anything does not equal over 100% of the deduction.
Ok, again, if I take 100% of one, does the other still need to actually put the form on their taxes just as zero values or just leave it off completely? Both still have itemized deductions as there are a few things that are only in one of our names.
Do not put down a deduction and claim zero on it. Claim whatever was the actual amount paid. The rule is you both have to itemize. You do not necessarily have to have the same itemized deductions.
the personal exemption disappeared when they raised the standard deduction as part of the Tax Cuts and Jobs Act
"Any way that seems reasonable" is not how the IRS guidelines suggest you split deductions. You are supposed to split pretty much everything down the middle if you make payments out of joint accounts and live together and don't specifically keep stuff separate. The exception is for property tax paid on a property owned by just one person, apparently. It says nothing about being the breadwinner, either, unfortunately. I think filing separately in order to pile all of the deductions onto the breadwinner's return would be a mistake, and potentially a red flag.
IRS guidance page doesn’t say “split evenly” just “split”. The definitions of “split” I find, don’t say anything out it being 50:50 or 75:25 or 100:0!? Maybe not 100:0 but overall I can’t find a document to say I can’t agree to divide it in a positive fashion for both spouses.
Any updates from either of you on this topic relevant to 2021? I will file MFS this year and with plenty of deductions, can my wife and I chose to split them how we see fit?
First---are you in a community property state?
Community property states: AZ, CA, ID, LA, NV, NM, TX, WA, WI
Then---read through this thread. You both have to itemize----divide the deductions however you both agree upon, as long as between the two of you, you are not claiming more than 100% of an amount.
Thank you. Just wanted to double check nothing has changed since OP two years ago.