I know that the Ohio tax system favors MFS in many instances. I have been told that due to this, Ohio tax pro's file an above average number of MFS returns. What I have also heard is it is common to take Schedule A deductions in ways other than 50-50 for payments coming from a joint account. This years TAX Book even mentions, "although 50-50 is the norm other methods can be used if a spouse can show why it should be differenet from 50-50" (I am paraphrasing but felt like I was using enough of Bees' words to use quotation marks). I am interested to hear some comments on taking an approach other than 50-5- especially from those who do it.
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Mfs In Ohio
Generally allocating the itemized deductions is not much of a issue. You want both to be in the same federal bracket. One spouse may have a refund which you could file early and then pay the balance due on the other later.
Ohio tax starts at federal AGI. Since the Ohio rates are graduated, the net saving is ~ $600 even if both have high incomes. This may be complicated since Ohio also has a joint filing credit. Most software does a calculation to determine best way to file.
But to answer your question, I generally allocate items linked to a social security number to that taxpayer. Interest to the spouse on the 1098 for example. Then charitable and r/e taxes to the other. State and CITY
withholding would go on the return with the applicable W-2.
My understanding is that if the payments are from a joint account you can allocate them any way that works best.
Rental losses and Social Security payments may make filing separately disadvantageous.
Estimated tax payments can be another problem. IRS tracks the first SSN on the payment coupon. Even with special cover alerts, the allocation of the estimates can also be a problem.
I hope this helps. -
Biased Incurrence
Kram, I'm not an Ohio preparer, but stop and think about the circumstances that can give rise to a separate return for federal purposes and I think you can carry forward the logic.
It could very well be that the Schedule A expenses are not incurred jointly. For example, an accident victim might be married to a nurse, yet was gainfully employed prior to the accident. His medical expenses are not joint - they are his. They could very well exceed 7.5% of his income, but not 7.5% of their total income. Likewise, she might be forced to clean and maintain uniforms as well as other job expenses. This could exceed 2% of her income, but not 2% of their joint income.
Also, for the math to optimize separate returns, it is also helpful if the incomes of both husband and wife be in the same tax bracket, or approximately so. If Ohio has a "flat" tax, this would include many more couples than Federal would.Comment
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