Unmarried buying home together

[Taxadvisor VA]

Client lives with her boyfriend and last Nov 2012 they buy a home together with both names on the mortgage and deed.
They are concerned how to report the mortgage interest on their separately filed tax returns. (They are not married).
It would seem to me to split the mortgage interest and real estate tax deductions in half as in theory they both contribute 50% to pay the mortgage each month.
What have you done in this situation? ______________________
Children:
They have one child together and a second will be born before the year is out. I don't know how they file b/c they are not a client of mine but a work collegaue of my wife asking a tax question.
They both can't file HOH occupying the same residence.
Can one file HOH, claim 1 or 2 kids, probably EIC is in the mix b/c one does attend school so wages are low and the other file single? Legally they would have to split the house deduction (Mtg + RE taxes) I would think.
What's your read?_______________
Thanks,
Taxadvisor VA

[David1980]

It would seem to me to split the mortgage interest and real estate tax deductions in half as in theory they both contribute 50% to pay the mortgage each month.

Fortunately this hasn't been true for any returns I've done yet. Most of the time I end up with one taxpayer making the payments and so they get the deduction. It could definitely be 50/50 or whatever though. Just keep in mind it's a deduction for mortgage interest paid, so if one of them is out of work and not making any contribution to the payments they aren't really paying mortgage interest.

Children:
They have one child together and a second will be born before the year is out. I don't know how they file b/c they are not a client of mine but a work collegaue of my wife asking a tax question.
They both can't file HOH occupying the same residence.
Can one file HOH, claim 1 or 2 kids, probably EIC is in the mix b/c one does attend school so wages are low and the other file single?

Correct. They can't both pay over half the cost of maintaining the household so it'll be whichever one actually did pay over half the cost that can claim HOH. That is, so long as that person is claiming at least one of the kids. It could be single/single if the parent who pays less than half the costs of maintaining the household claims all the kids.

[luke]

Careful

be Careful Taxadvisor about giving "tax advice" to anyone (even thru your spouse!) - You could be held liable and potentially drawn into a messy situation if your "advice" is NOT correct (or is misinterpreted by the tp) - it is nearly impossible to give correct advice WITHOUT ALL the FACTS!

[ATSMAN]

Client lives with her boyfriend and last Nov 2012 they buy a home together with both names on the mortgage and deed.
They are concerned how to report the mortgage interest on their separately filed tax returns. (They are not married).
It would seem to me to split the mortgage interest and real estate tax deductions in half as in theory they both contribute 50% to pay the mortgage each month.
What have you done in this situation? ______________________
Children:
They have one child together and a second will be born before the year is out. I don't know how they file b/c they are not a client of mine but a work collegaue of my wife asking a tax question.
They both can't file HOH occupying the same residence.
Can one file HOH, claim 1 or 2 kids, probably EIC is in the mix b/c one does attend school so wages are low and the other file single? Legally they would have to split the house deduction (Mtg + RE taxes) I would think.
What's your read?_______________
Thanks,
Taxadvisor VA

I have a few unmarried couples who are joint owners of their homes. Here is my tip to avoid a CP 2000.

On sch A line 11 deduct the portion of mortgage interest for the person whose soc. sec is on the 1098 INT.
On Sch A line 12 deduct the portion of mortgage interest for the other with full details of the mortgage holder or bank.

This obviously assumes that both can benefit from Sch A compared to standard deduction.

The other part that concerns me is that they are not your client. So I would suggest making them your client first before you dive into the second question because that is a bit complicated. But we know that both can not be HOH living in the same household.

[jimmcg]

be Careful Taxadvisor about giving "tax advice" to anyone (even thru your spouse!) - You could be held liable and potentially drawn into a messy situation if your "advice" is NOT correct (or is misinterpreted by the tp) - it is nearly impossible to give correct advice WITHOUT ALL the FACTS!

Rule Number 51; Never give tax advice ( or any other advice ) through a third party.

[mactoolsix]

Actually per IRS Memo TL-N-6671-97 date:APR 3 1998

http://taxes.about.com/gi/o.htm?zi=1/XJ&zTi=1&sdn=taxes&cdn=money&tm=44&f=22&su=p284.13.342.ip_&tt=13&bt=0&bts=5&zu=http%3A//www.unclefed.com/ForTaxProfs/irs-wd/1998/1998-041.pdf

In the Estate of Fleming case, the Tax Court specifically addressed the issue of
whether two individuals, each with their own children, who share a dwelling can
each be considered to maintain a separate household for tax purposes.
Estate of Fleming , 33 T.C.M. at 619.

However, this would not apply as per op the children are children or both single parents, and sounds like they (the parents) share the same bedroom, and were not "separate families." But an interesting case none the less . . .

Mike

[DaveO]

In this case I generally advise the higher income person to take the deductions, HOH and the children and the lower income person to take a free ride with the standard deduction. If they kids are theirs together they can split them however they wish. If the EITC is involved it may pay to assign them to the lower income person.