thunder04

iTrader: (1)

I got married in September of 2011, so this is my first year doing my (well, now our) income tax return as a couple. I'm trying to figure the difference in refund/owage for us with filing joint vs separately, but I'm a little confused on the filing separately process.

If I understood the process of filing separately, if one of us itemizes, the other must itemize as well. If that's the case, how do we distribute our deductions. We only have mortgage interest, mortgage insurance premiums, and property tax deductions.

Right now, if we file jointly, it's looking like we're going to owe $3k to the feds, but will get back ~$300 from the state. I'm very curious to see if filing separately makes much of a difference.

If I'm interpreting this article correctly:

http://www.smartmoney.com/taxes/inco...arately-15597/

A way to approach the married filing separately is to give the one with the lower income all the deductions?

What do y'all think?

Anachostic

I've been through this. Specifically answering your questions, the person that pays those deductible items (mortgage/taxes) can claim the full deduction on them if they can prove they paid it alone. If the funds come from a joint account, you can split the deduction evenly.

My ex-wife claims the insurance and property taxes and I claim the mortgage as that is what we each pay.

Hope you're not getting whacked with the marriage penalty. Make sure to check both joint and separate filings to see which is best for you.

thunder04

iTrader: (1)

^ I've always paid the mortgage and property taxes out of my checking account. My checking account is now our joint account. Does that mean I can do whatever I want in terms of dolling out the deductions?

I think I'll play around with giving them all to her, splitting them up, and then giving them all to me and see what happens.

Anachostic

That's not exactly how it works. If her name and ssn is on your banking account, it is a joint account and you'll split the deductions. If the account is yours only, the deductions are yours only. That aren't things you can hand out.

If the deductions are only yours, your evaluation is limited to joint filing or separate filing with all deductions against your income.

I thought I could do the same thing, and by my calcs, I would have come out $1k ahead, but alas, that's not the law.

thunder04

iTrader: (1)

Oh, I forgot about my student loan interest deduction...which I apprently can't claim when filing separately.

It's looking like filing jointly is going to be better. As of now, I'll owe the feds over $5k and the state over $800.

NSXNEXT

iTrader: (2)

$5k uh oh expect to have an underpayment penalty.

thunder04

iTrader: (1)

It's much less when we do joint. I'm not worried about it.

NSXNEXT

iTrader: (2)

IIRC anything over $1000 will get hit with a penalty. I had to pay a few years ago.

thunder04

iTrader: (1)

^ Oh I see. Well, we'll see what happens I suppose.