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2018 Taxes MFS Spouse itemizes

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    #1

    2018 Taxes MFS Spouse itemizes

    Unless I am missing something...?

    Client is filing MFS for liability reasons and spouse itemizes big time. This is hurting already since all she has to deduct are her State taxes. But in 2018, almost every dollar she makes will be taxable since she doesn't even get her exemption. What a bummer.
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    #2
    That will be an issue if not addressed by the IRS. Time to divorce and just live together.

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      #3
      Out of curiosity, what are the "liability reasons" to file separately?

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        #4
        Spouse is a real estate professional with frequent 1031 transactions, always pushing the limits and very creative. I am not saying he is doing anything wrong but there are sure numerous grey areas.

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          #5
          The other spouse is smart to keep it separate. Had a long time client who married and went to her spouses preparer and filed MFJ. Long story short, the other spouse sold a company and they had a hefty balance due. They split in the same year and he didn't pay the IRS (she didn't know it). So she came back to us and when we filed they took her refund the following year (that is how we found out he didn't pay the prior year). Plus he didn't have insurance on him or his kids (from a different marriage) and got hit with ACA penalties. We managed to get the IRS to waive the "balance due" on the sale of the business (on her end), but they would not waive the ACA penalties. So the past few years they took her refund to cover those. He was a real winner.

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            #6
            all she has to deduct are her State taxes. But in 2018, almost every dollar she makes will be taxable

            She can still deduct up to $10K of state tax. Are you sure about your comment? There is also the fact of lower tax brackets.
            "You said it, they'll never know the difference. Come on, we'll paint our way out!" - Moe Howard

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              #7
              Originally posted by Rapid Robert View Post
              all she has to deduct are her State taxes. But in 2018, almost every dollar she makes will be taxable

              She can still deduct up to $10K of state tax. Are you sure about your comment? There is also the fact of lower tax brackets.
              Yes, I am sure. She pays about $1,000 in State taxes - That's it, end of deductions and no exemption.

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                #8
                Of course you are right but it is no fun to tell any TP that every dollar he makes is taxable.

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