Incarerated spouse

[CAtaxgal]

Old client just called. She married a state prison inmate in 2009. They've never lived together. Any suggestions as to how to file them:

[Koss]

Filing Status

MFS.

Married Filing Stupid.



Okaaaay... how about a real answer?

Like any other married couple, they can choose MFJ or MFS.

MFJ is only an option if both agree to a joint return.

Does she have children living with her?

If she does, the case starts to get a little twilight zone...

Wages earned by an inmate are not earned income for purposes of EIC. But with a status of MFJ, they'll probably still get EIC based on her income, if she qualifies.

His income probably isn't enough to make a difference one way or the other. But if her income is substantial, she will benefit from the MFJ standard deduction... unless she's itemizing, in which case it really may not make a difference. You might have to try it both ways.

If they file a joint return, the refund check will have both names. Good luck to your client trying to get it cashed, or even deposited to a bank account, unless he has granted her a general power of attorney. Direct deposit of the refund might work out okay, even if the bank account is only in her name. Some banks won't allow it; others will.

If she has children, and MFJ is deemed to be a bad idea (for whatever reason), she might be able to use HoH, taking the HoH standard deduction, and claiming EIC. It certainly seems that she "lived apart from her spouse during the last six months of the year."

But you're going to get wrapped around the axle trying to determine if they were really living apart, because someone is going to say that his incarceration is a temporary absence.

Unless he's serving a life sentence. That would be a pretty good argument that they are "married but living apart."

It really is a gray area. If they were married first, and the guy gets sentenced to, say, ten years in prison, with possible parole after seven years, the wife could reasonably take the position that this is not a temporary absence, and that the relationship is over. She just hasn't found the money to file for divorce yet. She might even be living with some other guy.

But on your fact pattern... he went to prison and then they got married. Even if he has only served four years of a 30-year sentence, the fact that they got married could be construed to mean that they intend to live together as soon as he gets out... and that militates against the "temporary absence" theory.

BMK

[Koss]

Questions

Is the guy in jail for tax fraud?



Did this woman discuss the tax consequences of marrying an inmate with her attorney or her tax advisor before she tied the knot with this guy?



BMK

[BOB W]

I have a client who is married (before jail) to a prisoner. They file MFJ, she takes the ELF form to him, he signs it and she gives it to me several weeks later. I efile the return and the money goes into a bank account. No problems for the last three years.