Rebate- Ethics: He no, she yes- what to do

[Beth]

Regarding the stimulus rebate, I have a an elderly couple (relatives, no less-ugh!) who do not need to file due to insufficient income.

Now that the rebate is available, he won't file just to get that as "the gov't are all crooks", but she wants to file to get at least her $300. Obviously, I can file MFS, but then he most likely would be required to file and would now owe taxes.

So what would you do- knowing she really could use the money? My inclination is to file MFS for her, and tell him that it makes him liable....

We end up filing the federal and state returns some years just so that they can get the MN property tax refund...

Thoughts???

[devin]

I'm not a CPA, but I have become rather familiar with taxes including filing requirements through trial by fire. I certainly could be missing something, but I'm not sure how her filing married separately would cause him an individual filing requirement, or make him liable for anything. The stimulus payments aren't supposed to affect future returns or future tax liability, and the IRS never cares if you let them keep more money than they are entitled to (as long as that doesn't somehow create an undue benefit to the taxpayer in another tax area.)

All too well, I know how dealing with elderly relatives set in an idea can be difficult. Obviously you can only push so hard without causing severe problems for them or yourself, but I wonder if you and her together could convince him to just sign a married joint return. Using the reasoning that by filing out this form, you will take some money from "the crooks" might convince him to do it. In the end, it's getting him money back that he paid previously in his life to "the crooks". (Probably not worth getting into that you could also look at it as getting money paid for by foreign investments in the US...)

Either way, good luck!

[Snaggletooth]

Their Problem

Beth sounds like this is really "their" decision, and they are trying to make it "your" decision. The fact that they are kinfolk only adds fuel to the fire -- you can't "fire" them like other clients.

About all you can do as a tax practitioner can do is paint the picture. If a MFS situation is created, then the existence of only $3400 creates a filing requirement on the husband, even if it is only exempt social security. The wife has the right to file without permission from her husband, but also I believe you have the right to NOT file for anyone you desire. As such, you could require a "joint" decision from them, or back out of filing entirely.

Earlier this year, I was approached by a woman who wanted to file separate. Her separate income $15000, her husband's around $200K. Both she and her husband are friends of mine, and they were having trouble. I told her I would do so only after discussing this with her husband. I didn't hear any more from her.

I admire the perspective of your older gentleman. The "stimulous program" is a financial shell game to enhance election-year politics. However, turning away from the money does nothing to affect national policy, it only deprives him of $300 otherwise his, and creates a family boondoggle as well. Even a church accepts "the devil's money."

[Snaggletooth]

For Devin

I'm not a CPA, but I have become rather familiar with taxes including filing requirements through trial by fire.

Devin, welcome to the board. You don't have to be a CPA, or an EA for that matter. We enjoy discourse with anyone who has interest in tax matters and brings good discussion to the table.

Devin, when people file separately, the income requirements for filing are dramatically reduced. For example, if this gentlemen drew only $3400 in social security, he exceeds filing requirements, even if it turns out to be exempt.

[Matt Sova]

Separate

Tell her to move out before June 30 and not spend one night with him for the rest of the year. At the end of 2008 she can file single and get her rebate at that time.

Of course if he is as stubborn as this, she may enjoy that freedom and never move back!

Oh, and there is the cost of two separate households to consider.

Nevermind, bad idea.

[taxxcpa]

Advise them, then drop it.

I would give them my opinion, then drop it and let them decide for themselves.
You can lead a horse to water....

Clients often do things contrary to my advice, but that is their business and I don't let it bother me.

[Koss]

One possible answer

I generally agree with the earlier responses.

She has the right to file MFS, and you can choose to do that for her. You can then inform him that as a result of her decision, he is now required to file a tax return. You can also politely decline to prepare the return for him. Let him find someone else, and pay a professional service fee.

Or walk away altogether, taking the position that any action on your part could be give rise to a conflict of interest.

But if you want a really creative solution...

Offer to file the return MFS. Assuming they qualify for and receive the $600 payment, he can give his share back to the government.

I'm not kidding. The following text appears on page 77 of the basic instructions for Form 1040:

How Do You Make a Gift To Reduce Debt Held By the Public?

If you wish to do so, make a check payable to “Bureau of the Public Debt.” You can send it to: Bureau of the Public Debt, Department G, P.O. Box 2188, Parkersburg, WV 26106-2188. Or you can enclose the check with your income tax return when you file. Do not add your gift to any tax you may owe. See page 60 for details on how to pay any tax you owe.

TIP: You may be able to deduct this gift on your 2008 tax return.

[Jesse]

Tell her to move out before June 30 and not spend one night with him for the rest of the year. At the end of 2008 she can file single and get her rebate at that time.

Of course if he is as stubborn as this, she may enjoy that freedom and never move back!

Oh, and there is the cost of two separate households to consider.

Nevermind, bad idea.

She couldn't file single, possibly H of H if has a qualifying child, although the freedom she might enjoy.

[Bees Knees]

Tell him the purpose of the stimulus payments are to buy votes. If he doesn’t want anyone to purchase his vote, that leaves more money for the rest of us. Tell him thanks for giving his share of the bribe to the rest of us.