Bifurcation of Sch A - Cohabitation

[buzzardbreath]

Two same-sex people live together and are not married.

However, they jointly own the house they live in. There are property taxes and interest associated with the house.

There is enough expense associated with taxes and interest to enable one taxpayer to itemize deductions. If these expenses are split 50/50, neither will have enough to exceed the std deduction. One taxpayer makes considerably more than the other in 2013, and I suppose a case might be made to apportion the expenses based on their incomes.

How would you treat these itemized deductions? There are a number of possibilities, for example 1)split 50/50 2)allow one person to claim ALL Sch A deductions 3)maximize the tax impact by algebraically assigning deductions, etc. etc.

[taxea]

the only proper way to allocate the expenses is with documentation of payment made by each. Also are both on the deed and are both on the mortgage? It would not be based on 50/50 unless documents show that each made equal payments for each expense.

[buzzardbreath]

Actual Payment

Thank you for taking the time to respond.

I believe your response is exactly the same as the position of the IRS.

Regardless of how authentic this position is, there is virtually no way to apply this except in a rare instances where there are distinct and identifiable payments by one party or another. In the case described in the original post, the mortgage company drafts all payments from a joint account. Both individuals have their paychecks directly deposited into the joint account.

[ttbtaxes]

It is based upon who made the payments. Take a look at Rev Rul 71-268 and TC Memo 1976-329

I don't if the answer changes in a community property state as I don't do any returns in those states.

[JohnH]

With both individuals being liable for the loan, and both depositing pay checks into a joint account from which the payments are made, allocating the interest & property taxes algebraic ally is the most logical thing to do. State withholding, on the other hand, would be allocated according to the amount actually withheld on each w-2.