Marries Filing Separate

[Gary]

I have a client (in his 50s) that got married late in 2005. His wife filed for bankruptcy in January 2005. He wants to file married filing separate because he doesn't want any of his wife's obligations to be taken out of his refund. I explained filing MFJ with 8839, Injured Spouse relief, but he is pretty adamant about filing separately. I have always convinced clients not to file MFS because of the reduced benefits that almost always result.

Since Arizona is a community property state, this introduces another twist since all income (at least since they have been married) should be added together and split in two on each return. I've consulted with other tax professionals, and some say that this is a must, while others say that they prepare the MFS returns with each income separately (as in non-community property states).

Do any of you have any experience or knowledge of how to handle this situation. Any ideas would be appreciated.

Thanks,

Gary

[Unregistered]

Mfs

I file MFS in community state and just use each clients own income, you can split the income in half, but I don't think it is a must.

[Bees Knees]

IRC Section 66(a) "If (1) two individuals are married to each other at any time during a calendar year (2) such individuals (A) live apart at all times during the calendar year, and (B) do not file a joint return....then, for purposes of this title, any community income of such individuals for the calendar year shall be treated in accordance with the rules provided by section 879(a)..."

Section 879(a) is the exception to reporting community income of nonresident alien spouse's.

I assume the code has all of these exceptions so that you can determine when to ignore the community income reporting rules. I would also assume that when you don't meet any of these exceptions, community income, including wages, must be split between the spouses. If it was a matter of choice and not a requirement, then why all the rules?

[jainen]

in between warring lovers

If the absent spouse refuses to cooperate, you can ignore community property rules for that income. Of course, you still want to allocate half your client's income to the ex. Sometimes your client will refuse to give the ex evidence of income. Don't work for someone who won't follow the laws--life is to short to get in between warring lovers.

[veritas]

I would look to the state's community property rules. I believe it is possible that in a community property, state wages for instance could be considered seperate property.

[outwest]

Wages will generally be community income.

I would look to the state's community property rules. I believe it is possible that in a community property, state wages for instance could be considered seperate property.

About the only exception is property from before marriage with funds in seperate bank account. Occasional exception for written agreement but not common. Everyone is in love at when first married.

Doug