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A taxpayer, her boyfriend, and Schedule A deductions

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    A taxpayer, her boyfriend, and Schedule A deductions

    A taxpayer owns 50% of her home, and her boyfriend owns the other 50% of her home. They are not married. The payments of the real estate taxes and home mortgage interest are made from an account that they own jointly. I can see from the Form 1098 that the taxpayer's social security number is on it, but the account also has her boyfriend's name on it in addition to her name. I am doing the tax returns for both the taxpayer and for her boyfriend, and they want me to save them more money if possible. Can the entire real estate tax deduction and mortgage interest deduction be given to just one of them in order to save them money in this situation instead of splitting it in half for each of their tax returns?

    #2
    If only one of them contributed funds to the joint checking account, I would say yes. The one whose money it is gets the deductions. If both contributed to it, and you can tell how much each did, you can pro-rate. If you can't tell who put what funds in, then 50/50. You just said his name was on it. You didn't say he put any of his money in it.

    Comment


      #3
      Yes but

      Originally posted by Burke View Post
      If only one of them contributed funds to the joint checking account, I would say yes. The one whose money it is gets the deductions. If both contributed to it, and you can tell how much each did, you can pro-rate. If you can't tell who put what funds in, then 50/50. You just said his name was on it. You didn't say he put any of his money in it.
      Agree but Poster did not say if girlfriend put any of her money in the bank account. So simple challenge for Poster is what you suggest as to whose money was used in the bank account to pay the interest and R/E taxes. Also depending on additional facts found consider including an explanation and attached to return.

      Found in many of these types of "ownerships" a legal agreement always helps the "owners" and preparer should a future event occur that changes their "verbal" agreement.
      Last edited by TAXNJ; 03-17-2016, 09:03 PM.
      Always cite your source for support to defend your opinion

      Comment


        #4
        dont forget the property tax. I work the two returns so that the TP that needs the deduction the most gets it. You can split the deduction between the two for their benefit. It doesn't have to be 50/50 since it came out of a joint account.
        Believe nothing you have not personally researched and verified.

        Comment


          #5
          Reread

          Originally posted by taxea View Post
          dont forget the property tax. I work the two returns so that the TP that needs the deduction the most gets it. You can split the deduction between the two for their benefit. It doesn't have to be 50/50 since it came out of a joint account.
          Read again BURKE's reply post. The one or ones whose money paid.
          Last edited by TAXNJ; 03-17-2016, 09:35 PM.
          Always cite your source for support to defend your opinion

          Comment


            #6
            these are pooled funds. How do you know, once the funds are in the account, who's money paid for what?
            Believe nothing you have not personally researched and verified.

            Comment


              #7
              If both deposited at least as much as the interest and taxes combined, then you could split 50/50 or pro-rate. These days, almost all paychecks are electronically deposited. If that is the case, you could determine those amounts. The poster is trying to allow all deductions to one on Sche A and then let the other file standard. If he hadn't asked, no one would be the wiser. But he did ask, so to be fair, it should be split. What may happen, is that if that is done, both may be under the threshold, and it defaults to standard on both.
              Last edited by Burke; 03-18-2016, 06:49 PM.

              Comment


                #8
                Right

                Originally posted by taxea View Post
                these are pooled funds. How do you know, once the funds are in the account, who's money paid for what?
                Yes, we don't know and the preparer does not know. Only the clients know. Simple solution, preparer asks the clients for the answer.

                Again, refer back to BURKE's reply.
                Always cite your source for support to defend your opinion

                Comment

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