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Married Filing Separately Status
Old 11-17-2005, 09:29 AM   #1
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Married Filing Separately Status

As some of you know, I had an AMT question a few days ago. Based on some high level calcs, it looks like we won't have to worry about AMT. I am, however worried about our AGI and the 33% tax bracket hit

I ran some numbers with my spouse and I filing separately and dividing the mortgage int, prop taxes in half. Filing separately actually reduces our tax liability by about $6000.

Can we do this? All of the IRS material points to filing separately as okay. I'd just like to validate with folks who maybe experienced the same situation.
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Re: Married Filing Separately Status
Old 11-17-2005, 10:07 AM   #2
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Re: Married Filing Separately Status

Quote:
Originally Posted by cube_rat
Can we do this?* All of the IRS material points to filing separately as okay.* I'd just like to validate with folks who maybe experienced the same situation.
In the dim recesses of my memory is a recollection that this really screws up the deductions for owning rental property. (If that's even applicable to your situation.)

Then of course there's the hedonistic thrill of doing twice as many tax returns...
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Re: Married Filing Separately Status
Old 11-17-2005, 12:22 PM   #3
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Re: Married Filing Separately Status

Quote:
Originally Posted by cube_rat

I ran some numbers with my spouse and I filing separately and dividing the mortgage int, prop taxes in half. Filing separately actually reduces our tax liability by about $6000.

Can we do this? All of the IRS material points to filing separately as okay. I'd just like to validate with folks who maybe experienced the same situation.
Oh goody, more tax talk.

Yes you can file separately, but it generally does not work out financially, unless one of you has big expenses which you can only deduct if the expenses exceed a certain percentage of you AGI.

Here is the IRS faq on married filing separately: http://www.irs.gov/faqs/faq-kw115.html

I am surprised that you benefited to the extent of $6000. If you file MFS, you face tax bracket increases faster than if you filed as singles. Did you look at the right tax bracket tables? For the most part, deductions are split in half. Some credits and the like are not available if you file separately. If one person itemizes, you both have to itemize. You can't both claim the same child as your dependent.
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Re: Married Filing Separately Status
Old 11-17-2005, 01:37 PM   #4
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Re: Married Filing Separately Status

Yes, MFS is a higher tax amount according to the tax tables, however by filing separately we are no longer in the 33% tax bracket. 33% hurts! 25% is not so bad. Everything comes down to AGI. I simply can't get our combined AGI under enough to hit 25%(ouch!)
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Re: Married Filing Separately Status
Old 11-17-2005, 01:42 PM   #5
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Re: Married Filing Separately Status

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* You can't both claim the same child as your dependent.
We don't have children together. I would claim my daughter (from a previous marriage) on my return.
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Re: Married Filing Separately Status
Old 11-17-2005, 02:45 PM   #6
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Re: Married Filing Separately Status

Did you also do the AMT guesstimate for MFS?
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Re: Married Filing Separately Status
Old 11-17-2005, 02:52 PM   #7
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Re: Married Filing Separately Status

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Originally Posted by Martha
Did you also do the AMT guesstimate for MFS?
Nope. I was thinking on the way home to take Brewer's advice and run the numbers through Turbo Tax. I'm going to do that this afternoon. I'll report back on my findings, which should be more specific.
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Re: Married Filing Separately Status
Old 11-17-2005, 03:14 PM   #8
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Re: Married Filing Separately Status

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Originally Posted by cube_rat
Nope.* I was thinking on the way home to take Brewer's advice and run the numbers through Turbo Tax.* I'm going to do that this afternoon.* I'll report back on my findings, which should be more specific.
You figured out your married-separate taxes freehand? No wonder you came out $6000 ahead. Chances are you missed something along the way.
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Re: Married Filing Separately Status
Old 11-17-2005, 03:57 PM   #9
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Re: Married Filing Separately Status

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You figured out your married-separate taxes freehand? No wonder you came out $6000 ahead. Chances are you missed something along the way.
Yep, my hand calcs for MFS were WAY off on my husband's side. When running both scenarios, MFS total tax liability is ~1K higher than jointly. The government isn't going to make MFS an advantage to anyone. Oh well, it was well worth the exercise. I know our wallet will be 12K lighter for federal taxes.
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Re: Married Filing Separately Status
Old 11-17-2005, 04:43 PM   #10
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Re: Married Filing Separately Status

Quote:
Originally Posted by cube_rat
The government isn't going to make MFS an advantage to anyone.
It does, but to very few.
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Re: Married Filing Separately Status
Old 11-18-2005, 04:24 AM   #11
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Re: Married Filing Separately Status

well my wife had some big capital gains this year on property in her name and we hit the amt and worse hit the total phase out points on deductions..if we filed jointly my income would be hit with a flat 28%...since we hit the phase out point for all deductions and the amt is a flat rate then it makes more sence to file seperatley...the amt as i see it is the same whether my wife files jointley or seperatley but my income is taxed less seperatley....
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Re: Married Filing Separately Status
Old 11-18-2005, 08:11 AM   #12
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Re: Married Filing Separately Status

Quote:
Originally Posted by cube_rat
Yep, my hand calcs for MFS were WAY off on my husband's side. When running both scenarios, MFS total tax liability is ~1K higher than jointly. The government isn't going to make MFS an advantage to anyone. Oh well, it was well worth the exercise. I know our wallet will be 12K lighter for federal taxes.
I hear ya, 11k to state and feds for us, too.

It's supposed to be a problem we want to have, but I think high expense states like Cali get hosed by the Feds.
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