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KattiEm
New Member

Married Filing Separately, do I have to split joint investment account income?

I am trying to minimize my tax burden. One of us had no income, the other did. Is it legal to just report the investment income on the return for the one with no other income? I don't actually know if this will result in a lower tax burden yet - but, if we are forced to split the income between us then I will save the effort of figuring this out both ways. Our state is NOT a community property state.

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2 Replies

Married Filing Separately, do I have to split joint investment account income?

If you are legally married and living together and one of you had no income, why are you not filing as Married Filing Jointly? 

The Standard Deduction for MFJ is $29,200 versus the Standard Deduction for Married Filing Separately of $14,600.  Especially if you are trying to lower your tax burden.  You also have the lowest tax brackets with filing as MFJ.

KattiEm
New Member

Married Filing Separately, do I have to split joint investment account income?

I did not understand how Capital Gains and Regular Income were treated. However, I did find a great tool on NerdWallet that helped me:  https://www.nerdwallet.com/article/taxes/capital-gains-tax-rates

 
It looks like there is just a little difference in the tax amounts for my exact situation. The benefit of $0 tax on the capital gain goes away after $47,025 and is offset by the better deduction of married filing jointly. Just taking into account income and capital gains the tax difference is less that $1,000. 

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