married filing separate

[FEDUKE404]

Reason is open to debate

Because 99% of the time I don't have a reason to separate on a MFJ return. Because it isn't required unless doing a "what-if" scenerio. Because it's a PITA.
need I go on?

I hardly consider merely checking the T or S or J ownership box for tax documents such as W2s or 1099s to be a "PITA." (And for continuing clients, it's a "one-time action" anyway!) OTOH, I consider not doing so to present possible problems within a joint return when that information is omitted. There are definite items within a joint tax return where that information is critical for the proper calculation of the tax liability.

OTOH, I do not routinely run a MFJ/MFS analysis (even though a worksheet is dutifully crunching away in the background at all times) as there is some extra work, such as allocation of certain deductions and/or dependents, that would require a bit more time on my part to obtain a correct answer. Other than perhaps a cursory glance at the worksheet, I rarely venture there unless there is a perceived need to investigate further.

A lot of our tax work does involve somewhat menial tasks, but frequently there is a reason (other than the oft-cited "it doesn't matter" or "I've never had a problem doing that" excuses) to perform those tasks for our clients.

FE

[MRPLOW]

Your doing your clients a disservice if not comparing MFJ vs. MFS.

The number #1 reason would be child tax credit for a married couple when they are phased out and both are working. Some times putting the children on the smaller wage earner's return can result in a higher refund by the thousands.

Because 99% of the time I don't have a reason to separate on a MFJ return. Because it isn't required unless doing a "what-if" scenerio. Because it's a PITA.
need I go on?

I did 4 of these child tax credit type of returns already this year, and I've only completed 52 married returns so far. Saving clients $1395, $881, $304, and $1785 respectively. I've also got 2 others that because of 2% or 7.5% limit did MFS. That's 11% of my married couples so far this year. Isn't that a good enough reason?

Interestingly the client that saved $1,395, there accountant filed MFJ for the last 3 years that that they brought in to me. They could have saved about $4000 over the last 3 years had I done there return. They were not to happy to hear that they could not amend those returns. The money was lost, because there former accountant was incompetent.

[Lion]

What happens with capital loss carryovers if you don't designate T or S? Your software probably assumes 50/50 or defaults to J which probably defaults to 50/50. Now, when T or S dies, their capital loss dies with them. You'll have to pour over broker statements for years back to determine what part of the loss belongs to the surviving spouse.

I check the auto worksheet to see how close or far they are from MFS being a benefit. Then, I only have to do any additional work to refine the sheet if it's possible it will lead to a benefit.

[taxea]

What happens with capital loss carryovers if you don't designate T or S? Your software probably assumes 50/50 or defaults to J which probably defaults to 50/50. Now, when T or S dies, their capital loss dies with them. You'll have to pour over broker statements for years back to determine what part of the loss belongs to the surviving spouse.

I check the auto worksheet to see how close or far they are from MFS being a benefit. Then, I only have to do any additional work to refine the sheet if it's possible it will lead to a benefit.

Not really I make copious notes on the return and on the client's records. When I need it I have it and it is quicker for me than filling out those silly boxes.

[DexEA]

I hardly consider merely checking the T or S or J ownership box for tax documents such as W2s or 1099s to be a "PITA." (And for continuing clients, it's a "one-time action" anyway!) OTOH, I consider not doing so to present possible problems within a joint return when that information is omitted. There are definite items within a joint tax return where that information is critical for the proper calculation of the tax liability.

OTOH, I do not routinely run a MFJ/MFS analysis (even though a worksheet is dutifully crunching away in the background at all times) as there is some extra work, such as allocation of certain deductions and/or dependents, that would require a bit more time on my part to obtain a correct answer. Other than perhaps a cursory glance at the worksheet, I rarely venture there unless there is a perceived need to investigate further.

A lot of our tax work does involve somewhat menial tasks, but frequently there is a reason (other than the oft-cited "it doesn't matter" or "I've never had a problem doing that" excuses) to perform those tasks for our clients.

FE

"merely checking the T or S or J ownership box for tax documents such as W2s or 1099s to be a "PITA." (And for continuing clients, it's a "one-time action" anyway!" ~~ You read my mind! Also there can be certain credits on the state return, for example Married Both Spouses Working Credit that will transfer calculations if appropriately coded.

[Super Mom]

Because 99% of the time I don't have a reason to separate on a MFJ return. Because it isn't required unless doing a "what-if" scenerio. Because it's a PITA.
need I go on?

It is not difficult, simply check the box for taxpayer or spouse on the w-2's, 1099 ints, 1099 r's etc. It's just a habit for me to enter that information.

[ToledoEd]

One of the things I like about Drake is that I can enter separate Sch A's for each spouse, by putting a T or S on the first box of the Sch A. If makes the MFS worksheet more accurate. I used to think that it was a waste of time to use those T S or J boxes, but as it has been stated you only do it once per form, and it does carry over and saves a lot of time making notes outside the program that someone else reviewing the file may not understand.

[Traveling EA]

Community Property state

I don't waste my time with T-S-J for anything except wages, since a comminity property state splits all 50/50. I indicate on the wages, since WI has a credit based on earned income.

[MRPLOW]

Here is a few Federal MFS savings I have had so far this year...
$790
$580
$2,623

[FEDUKE404]

Going the MFS route

Here is a few Federal MFS savings I have had so far this year...
$790
$580
$2,623

Good for you.

I've found very few people can (conceivably) benefit, since many tax doors get firmly slammed when MFJ -->> MFS occurs.

The most likely scenario is someone with high medical or perhaps job expenses and lower income. But then it can get a bit ... frustrating ... when you figure out who paid which contribution, or property tax, or mortgage payment, or day care expenses (oops, forget that!), or Roth IRA (oops, likely forget that!), or student loan interest (oops, forget that!). And then if Social Security payments are received...don't even bother...they're gonna lose badly.

FE

[buzzardbreath]

Tax Brackets

With all due respect to one who claims to prepare "most" of his couples as married/separate, I just don't see how it
can help except in rare cases.

Consider first our progressive "bracket" rate system. I call them "buckets". For MFS to work, you simply HAVE to have equal amounts in the lower brackets. Under no scenario is it mathematically possible to have MORE income in the lower brackets by filing separate. The math just does not work. The best you can hope for is for the exposure to lower brackets to be equal, and this can sometimes happen if incomes are approximately equal. And then to enjoy ANY advantage, one spouse would need to exceed the 2% and 10% thresholds based on his/her income alone. THEN, it can work. Many married couples lose itemized deductions because a percentage of their combined incomes stifle these two thresholds, whereas if only one income is involved, some excess will survive the thresholds.

Lower bracket maximization may also occur if taxable incomes are somewhat (but not totally) disparate. A spouse with
$9000 in taxable income and the other spouse with $35000 in taxable income will have $8925 apiece in the lowest bucket, for a total of $17,850. This is the same amount as they would have if they were MFJ, so one should be encouraged to at least try the MFS if a threshhold threatens to take itemized deductions away.

Another problem is how to assign income and deductions when MFS. Some are obviously attached to one spouse or the other, but much of the joint stuff provides a unethical temptation to maximize the math. For those items of income and expense which are not attachable, I always prorate based on income. We obviously can't split children unless there is an even number, but I will first award a child to the spouse with highest income.

Enough of a long-winded response. Not even worth a "26.2" on my back windshield. That goes to Burton Koss...

[Gretel]

There are usually two areas where it might benefit. If one has high medical deductions, because 7.5% exclusion is less when income is filed separately; and the other is when one has business expenses subject to the 2% exclusion and can use more of them when income is filed separately. If social security is involved, and you file MFS there is no exclusion amt, so that might work the other way. Likewise, all the credits etc you can't use when MFS.

Yes, and it also could be beneficial if income is too high to claim child tax credit.

[TAXNJ]

Preparer responsibility?

I thought it is the preparer's responsibility to preparer both MFJ & MFS and present the results to the client.

Am I wrong?

[MRPLOW]

With all due respect to one who claims to prepare "most" of his couples as married/separate, I just don't see how it
can help except in rare cases.

Consider first our progressive "bracket" rate system. I call them "buckets". For MFS to work, you simply HAVE to have equal amounts in the lower brackets. Under no scenario is it mathematically possible to have MORE income in the lower brackets by filing separate. The math just does not work. The best you can hope for is for the exposure to lower brackets to be equal, and this can sometimes happen if incomes are approximately equal. And then to enjoy ANY advantage, one spouse would need to exceed the 2% and 10% thresholds based on his/her income alone. THEN, it can work. Many married couples lose itemized deductions because a percentage of their combined incomes stifle these two thresholds, whereas if only one income is involved, some excess will survive the thresholds.

Lower bracket maximization may also occur if taxable incomes are somewhat (but not totally) disparate. A spouse with
$9000 in taxable income and the other spouse with $35000 in taxable income will have $8925 apiece in the lowest bucket, for a total of $17,850. This is the same amount as they would have if they were MFJ, so one should be encouraged to at least try the MFS if a threshhold threatens to take itemized deductions away.

Another problem is how to assign income and deductions when MFS. Some are obviously attached to one spouse or the other, but much of the joint stuff provides a unethical temptation to maximize the math. For those items of income and expense which are not attachable, I always prorate based on income. We obviously can't split children unless there is an even number, but I will first award a child to the spouse with highest income.

Enough of a long-winded response. Not even worth a "26.2" on my back windshield. That goes to Burton Koss...

I haven't seen 1 single post on this thread from anyone that claims to prepare "most" of their married couples as separate?

And there is nothing ethical about putting dependent's on whose ever tax return provides the most benefit.
Where did you even come up with this "award a child to the spouse with highest income" nonsense?

[MRPLOW]

Real life from 2012, this scenario happens all the time with working couples and kids.


MFJ (2 dependents)
Income tax: 13,891 (AGI = 129,744)
Child credit: -1000 (phased out)
NET TAX: 12,891


MFS
Income tax: 9,311 (AGI = 78,702)
Child credit: 0
Net tax: 9,311

Income tax: 4,699 (AGI = 51,042)
Child credit: -2,000
Net tax: 699

MFS COMBINED
Income tax: 14,010
Child credit: -2,000
NET TAX: 12,010

MFS SAVINGS: $881.


But, I guess these savings are just a figment of my imagination.