Immigrant pays lot of taxes when spouse owns a property

one party owns nothing since they're an immigrant.   What is the residency status of both parties?  Is one or both parties a non-resident or are both parties residents for tax purposes with one or both meeting either the green card test or substantial presence test.  If neither of you are considered residents for tax purposes, then you would need to file a 1040-NR which TurboTax does not handle.  This can be filed using Sprintax.com.  If one of you are a resident and the other is not, then if the one that is not would need to file a 1040NR if they are not filing a joint return.  Or, if only one of you are residents, then you can file a joint return and choose to have both parties treated as residents for tax purposes. 

 

 

as single, one who owns nothing, would file standardized where as one who owns property, would file itemized no brainer.  What kind of property is owned?  Rental property or just a home?  When married, you both must take the same deduction, either itemized or standard. 

 

 

now when they're married, the "best" option is to file jointly & itemized. however, it is still about 3-3500 less payback from irs than if the property owner would be single. so the immigrant pays spouse the gap. every year. for the rest of their life. Why is this the best option?  Did you do 2 separate returns and see how it comes out the best?  Yes, if one person itemizes, both must.  But, if income is $100,000 for each party, since state and local income taxes and sales tax are part of the itemized expenses, depending on the state, and if there are any charitable donations, you may turn out better or maybe not.  For example, if you are in a state with an 11% state income tax and earn $100k, that is $11,000 in income tax.  It would be limited to $10,000 under the SALT cap, but the itemized deductions would be $10 instead of $12,950.  

 

This will depend on multiple factors, but you can create a "dummy account" and see how you do together and separately. 

 

 

my question is if how to make this more just? because as it is now, it is absolutely unjust.

should they own property 50:50?  This again will depend on many factors, including the state, what type of property, residency status.  In general, one person owning something like a house should not make that big of a difference on taxes when comparing joint to separate.  To start with the standard deduction is doubled for someone who is married.  Being married would not decrease your itemized expenses. 

thanks for the reply

a quick answer to the first question, then i go through the whole thing:

the party who owns a home, mortgage about 50% paid off, therefore still deductible interest, and all that comes with it, and property tax of course.

the party who does not own anything is the immigrant, and is a permanent resident with green card.

california.

There is one error in your reasoning. 

 

I assume that they are married. You say that if they file separately, the spouse who owns the property will claim itemized deductions with the mortgage interest and property taxes while the other spouse will use the standard deduction, and together they will end up paying less tax than if they filed jointly.

 

This scenario is not allowed by the IRS. When filing separately, both spouses MUST use the same deduction method (either both Standard or both itemized deductions). If one spouse use itemized deductions, the other must also itemize even if the itemized deductions are much lower than the standard deduction.

 

This has nothing to do with the fact that one spouse is an immigrant. In fact, a green card holder is a resident alien and is treated exactly as a US citizen.

 

 

thanks.

i just pointed out "immigrant" because about 0 immigrants come to the us owning a property here. can be a us citizen owning nothing.

and yes. i know that part.

let me try to rephrase. the home owner claims that the base should be what they'd get back (itemized/standardized doesn't matter in this sake) if they weren't married. so the other party, no matter how they decide to file, MUST make it up to that number. i wish i saved all the scenarios. i remember vaguely, rough numbers, please don't judge if they look unreal, they are close to the actual numbers. the immigrant's tax comes out to be about a 150 dollars negative. if they weren't married, or if they were but would file separately and both file standardized. the home owner's tax return turns out to be a huge $6500 positive (itemized), and very low if they only use standard deduction.

now if they file standardized, as a couple it's around $3000+, itemized $4000+ therefore the best option is to file jointly itemized. best option for the home owner anyways. because the other party as described above MUST pay the home owner the gap of $2500. meaning being married is kind of a. tax burden for someone who owns nothing and jumps into a marriage with someone who owns a home.

i'll come up with the real numbers tomorrow.

i'm sure there's no solution, and the spouse who doesn't own a property will always have an extra cost.

..or they're doing something wrong.

It may not seem equitable on the surface but with the tax law being the way that it is, the spouse that doesn't have enough itemized deductions will have a bigger tax burden.  It doesn't mean you are doing anything wrong  but it is the way the code is constructed. This is one of the main reasons why it is better to file jointly if you are able to.

 

@gabecz