Any marrieds filing taxes separately???

[surfgirl]

I dont usually post on this forum area but I have a question and I thought the married ladies seem to hang here more so maybe you all have some opinions on this. I''m an independent consultant and Mr. Surfgirl was consulting but since last year he''s now full time employed, no more consulting. Before we married last summer, we obviously did our taxes separately. Now, the only thing we cant seem to get sorted out is taxes. He wants to keep his tax guy, I want to keep my tax lady. His guy sends him a form once a year and often doesn''t return his calls promptly if at all. My lady is awesome and returns calls within 24 hours and usually faster, and she understands my work field and the sometimes wonky deductions I take as a result. Mr. Surfgirl thinks it''s totally okay to file "married, filing separately" and I''m not sure. I cant seem to get a clear understanding even from my tax lady as to whether or not it makes any difference. From what I can gather, people usually do this when they''re separated but still married and dont want to be responsible for the other person''s tax obligations. That''s not the case with us but I''m at a loss as to what to do. I thought since I consulted last year, I should stay with my lady and let her do it, but that means we file separately. Any thoughts, comments, etc. would be most appreciated. Thank you!

 

[Skippy123]

Surfgirl, it isn''t too often that it is a good idea to file separately. I guess it depends but here is a quick answer to your question if these things might apply to your situation then it might be a good idea, otherwise it isn''t. http://www.bankrate.com/brm/itax/tips/20020214a.asp I am sure your tax person will tell you honestly if ask her, and if you really want some fun reading look at the IRS website for a publication 17 here for many answers to lots of tax questions.

 

[surfgirl]

Thanks for that link Skippy. I just read it and I'm still confused. I think another phonecall to my tax lady is needed. I itemize everything, my husband doesn't since he's now a fulltime employee, and according to that link, if one spouse does itemization, both have to. It just sounds very complicated.

 

[ljmorgan]

In most cases you''ll get a better tax break by filing jointly.

 

[Beacon]

Do you have access to your husband''s income information? Is he willing to broach this subject or has he already decided?

If he is willing you could give both of your tax info to your tax accountants and have them prepare a trial return with both a married filing joint and married filing separate status and see which one worked out better.

If your spouse will not let you see his prior year''s returns or let your tax pro look at his current income/deductions then, yeah, I would go for married filing separate even though you may pay more taxes that way. I might be somewhat concerned about the tax situation if he is really stuck on his own privacy and married filing separately will at least keep you off any liability.

 

[surfgirl]

Date: 2/8/2008 8:14:17 PM
Author: Beacon
Do you have access to your husband's income information? Is he willing to broach this subject or has he already decided?


If he is willing you could give both of your tax info to your tax accountants and have them prepare a trial return with both a married filing joint and married filing separate status and see which one worked out better.


If your spouse will not let you see his prior year's returns or let your tax pro look at his current income/deductions then, yeah, I would go for married filing separate even though you may pay more taxes that way. I might be somewhat concerned about the tax situation if he is really stuck on his own privacy and married filing separately will at least keep you off any liability.

Beacon, thanks for the comments...He hasn't done his taxes yet but I dont think he'd have any issues with me taking his taxes from last year to my lady, and letting her compare with my last year taxes to see which way is best to go...actually, that's a really good idea and I'll talk to my lady about it on Monday..thanks!

BTW, it's not really an issue of privacy that neither of us wants the other to see our tax returns, it's more an issue of neither of us wants to give up his/her tax accountant and to be honest, I think mine is better! And she knows how to do my taxes which are a bit more complicated than his...That's the main issue...

 

[Selkie]

I'm struggling with this as well, for similar reasons. He has two jobs, plus a short-term biological survey consulting position, which makes his taxes complex. For the past couple of years he's used a tax guy. Mine are simple: wages and interest only and I've ALWAYS done them myself. I ran our numbers through H&R Block's online TaxCut program both ways, married filing jointly, and married filing separately. The difference was only $20 between the two results, with joint filing being the lower. I don't think that it makes a huge difference in terms of liability. The fact that you itemize and he doesn't is one good reason to file separately. Another would be if you expect a return, and he expects to owe or vice versa (that's our situation). I'm curious to hear what happens when you talk to your tax lady.

 

[Mara]

honestly i think you guys should work this out now because even if you file separately this year, what happens next year? and the year after? you''re married now, time to figure this out. what about a compromise...say okay well why don''t we use mine this year and just see how you like her? and if not, we can try your guy. he might like having better service and let his other guy go. OR if you guys are really feeling like settling it once and for all, see if you can get a good rate and have both people do your taxes the way they would this year and see whose experience you guys like better and what the finals look like (but really it''s all about you swaying him to YOUR direction hehee).

i brought our tax guy into our relationship, before greg did his own, so there was never any Q about who to use, but ours is great. however we have toyed with the idea of trying one of our friend''s guys who she loves. but we''re too lazy to move at this point. we file in feb and typically have our refund within 2 weeks after filing, so can''t complain about service really.

also i don''t think that if one of you itemizes the other one has to because i itemized the last few years due to the nature of work i was doing, but greg didn''t. from what i have ''heard''...people say that filing separately is not necessarily the way to go unless there is some financial reason you don''t want to be linked. not sure about how you''d get dinged more. good luck!

 

[surfgirl]

Thanks for the additional comments ladies...Selkie, I''ll let you know...The other issue is that I''m taking an extension this year so I''m not sure how that complicates things. I''ll ask her.

Mara, talking about service...that''s my main reason that I dont want to switch to his guy. Last night I tried to bring this up and I asked if I could call his guy and ask him some questions and he said he''d do it. Why? Because "he''s a really busy guy and I''m not a big ticket client of his, he doesn''t have a lot of time to talk on the phone..." I was like WTF?! Seriously, I''m not a big ticket client either but my tax lady is always available to talk about anything, anytime. I think men take it as a personal afront to them that they cant pick a good tax person so they''ll never change as that would mean they were wrong in the first place. And yes Mara, you''re of course correct, my person is way better and naturally, I''m right! But we already knew that...

 

[Selkie]

Date: 2/9/2008 12:44:17 PM
Author: Mara

Ah, you''re right. I misread the information. If you file SEPARATELY, you either both have to itemize, or take the standard deduction.

 

[pennquaker09]

Just from what I know about taxes, I have to agree with the others, if you file separately you''re going to be at a disadvantage. You''ll both have to itemize and take the standard deduction - as the last post said. I think you just need to sweet talk him a little, and he''ll come around.

I have to say that this is one of the great things about being able to be legally married . . . it''s a benefit, if you will.

 

[surfgirl]

Just an update on this tax thing...

We ended up finally going with my CPA and she did a great job and hubby''s happy I think. In the end, it was extremely complicated to do a "married filing separately" because apparently when you do that, you also have to account for half of your spouses salary in your calculations. It just gets very complicated and really, there''s no tax benefits to doing it that way. So in the end it all worked out but I wanted to update folks, especially Selkie, because we''re in a similar situation - he has a steady job and I''m a consultant with weird deductions...It all works out Selkie, you just do one regular form and one Schedule C, IIRC...If you have a similar situation I really think it''s best to go to a good CPA, I cant imagine doing this myself...

 

[zhuzhu]

Good to learn from your experience, thanks!!!

 

[Selkie]

Thanks, surfgirl. So you did end up filing jointly, right? So did we. I did it all online through Tax Cut, which also took care of his schedule C. It just made more sense in the end, as with you guys. It was frustrating, because normally I get a refund so I do my taxes as soon as I get all my W2s and whatnot, while he usually owes, so puts it off (and most other things, to be frank) until the very last minute. So while I had filled in everything online months ago, we only got around to submitting last Saturday. His comment? "This is the earliest I've gotten my taxes done in the last five years!" I said, "Well, this is the LATEST I've done mine in the past ten years, so get used to it!" Now I just have to keep kicking him in the *ss until he amends his W4s so he doesn't owe next year!

The REALLY irritating bit is that the stupid bribe, er, I mean, rebate we get in a few months will be almost exactly what we ended up having to PAY.

Luckily, my brother is a CPA, so we can double check things with him.

 

[janinegirly]

I''m not a tax expert, but had a similar issue. My DH wanted to file separate, and said his accountant recommended this. Anyway his reasoning was DH has real estate income and lots of itemizations, I have none. He gets pretty hefty tax break if he is below a certain income level, but if we report both our incomes combined it would reduce his tax break. So according to the accountant, filing separate would result in more $$ in tax return for DH. I had a bit of a hang up over it..thinking I was being cast aside, but end of the day we married late in 2007 so technically I was single 10 months of the year anyway, so makes sense to file separate (and single). Plus tax refund for DH goes into our house savings account anyway.

Next year we''ll have a baby and possibly a house so we better be filing jointly.
Let me know what you decide..I was very curious about this issue too (ie in what scenarios it is beneficial to file separate). Maybe ask your accountant although she''ll probably ask for his income information to properly assess.

 

[Kay]

Date: 2/10/2008 4:02:18 AM
Author: pennquaker09
Just from what I know about taxes, I have to agree with the others, if you file separately you''re going to be at a disadvantage. You''ll both have to itemize and take the standard deduction - as the last post said. I think you just need to sweet talk him a little, and he''ll come around.

I have to say that this is one of the great things about being able to be legally married . . . it''s a benefit, if you will.

Unfortunately, it is not a benefit for everyone. We pay more in taxes now that we are married, thanks to the marriage penalty that hits spouses that earn similar incomes. We both have our own health insurance and other benefits through our individual jobs, so there are no offsetting financial benefits of being married that we did not have when we were just living together.

I have always prepared my own returns and prepared DH''s when we were dating. For 2005, the year we were married, I ran the numbers as married filing jointly, married filing separately, and as 2 singles (out of curiousity). Filing as married filing separately would have cost several hundred more than filing jointly. But filing jointly required us to pay almost $4,000 more in taxes than if we were single that year.

And don''t even get me started on the alternative minimum tax!

 

[Rhea]

We file separately. It makes sense for us for many reasons, mostly because as a US citizen I''m a tax payer for life no matter where I live (and getting no benefit from the US gov''t despite them wanting my taxes!!) whilst DH is not. We file separately so that his income can''t be touched. But this is definitely not the normal situation around here, I assume.

I''m glad that you got your taxes figured out!

 

[Selkie]

Date: 4/15/2008 5:53:38 PM
Author: Kay

Unfortunately, it is not a benefit for everyone. We pay more in taxes now that we are married, thanks to the marriage penalty that hits spouses that earn similar incomes. We both have our own health insurance and other benefits through our individual jobs, so there are no offsetting financial benefits of being married that we did not have when we were just living together.

I have always prepared my own returns and prepared DH''s when we were dating. For 2005, the year we were married, I ran the numbers as married filing jointly, married filing separately, and as 2 singles (out of curiousity). Filing as married filing separately would have cost several hundred more than filing jointly. But filing jointly required us to pay almost $4,000 more in taxes than if we were single that year.

And don''t even get me started on the alternative minimum tax!

How exactly does that happen? The marriage penalty, I mean. I know they made some adjustments in 2003 that were supposed to reduce it for most couples, but why does it affect those who earn similar amounts? Is it that your combined incomes push you into a higher tax bracket, so that the tax on the sum of your incomes is disproportionate to the sum of the taxes on your individual earnings? Is that only applicable to brackets higher than 15%, because I ran our taxes all three ways also and came out with similar amounts owed (~$50 variance either way)?

 

[Kay]

Date: 4/15/2008 6:37:31 PM
Author: Selkie

Date: 4/15/2008 5:53:38 PM
Author: Kay

Unfortunately, it is not a benefit for everyone. We pay more in taxes now that we are married, thanks to the marriage penalty that hits spouses that earn similar incomes. We both have our own health insurance and other benefits through our individual jobs, so there are no offsetting financial benefits of being married that we did not have when we were just living together.

I have always prepared my own returns and prepared DH's when we were dating. For 2005, the year we were married, I ran the numbers as married filing jointly, married filing separately, and as 2 singles (out of curiousity). Filing as married filing separately would have cost several hundred more than filing jointly. But filing jointly required us to pay almost $4,000 more in taxes than if we were single that year.

And don't even get me started on the alternative minimum tax!

How exactly does that happen? The marriage penalty, I mean. I know they made some adjustments in 2003 that were supposed to reduce it for most couples, but why does it affect those who earn similar amounts? Is it that your combined incomes push you into a higher tax bracket, so that the tax on the sum of your incomes is disproportionate to the sum of the taxes on your individual earnings? Is that only applicable to brackets higher than 15%, because I ran our taxes all three ways also and came out with similar amounts owed (~$50 variance either way)?

The problem arises because the tax rates are progressive. The amount taxed at each rate bracket (10%, 15%, 25%, 28%, etc.) for married couples is less than double the amount taxed at the same brackets for singles. Congress partially fixed the problem in 2003 by making the 15% bracket for marrieds double the 15% bracket for singles. However, there is still disparity for the higher brackets. For example, for singles, the 25% bracket goes from $31,850 to $77,100. Double $77,100 would be $154,200, but the 25% bracket for married filing jointly ends at $128,500 (for married filing separately it ends at $64,250). Thus, if 2 single people each make $77,100, all of their income will be taxed at 25% or less; however, if those same two people are married, $25,700 of their income will be taxed at 28%, for a tax increase of $771. The disparity gets even worse as you get into the higher brackets. The 28% bracket ends at $160,850 for singles and at $195,850 for marrieds (which is $125,850 less than double the single rate, so that amount is subject to the 33% rate or an additional 5% of tax).

Additionally, the value of your itemized deductions and personal exemptions (including for children) get decreased as you hit certain income thresholds. The hit comes at an income threshhold for marrieds that is less than double the threshhold at which singles have to start reducing their deductions, so you effectively get penalized three times for being married if you are in a higher tax bracket (the combination of higher marginal rates and reduced deductions and exemptions).

Congress will not solve the problem by simply making all of the tax brackets for married filing jointly double the brackets for singles because a large number of married couples enjoy what is known as the “marriage bonus.” If one spouse has a moderate to high income and the other spouse has a low income or does not work, then the combined tax the two will pay under the married filing jointly brackets will be lower than what the two would pay if they filed separately as singles. (You don’t get benefits from income averaging if your incomes are already close.) If Congress made all of the tax brackets for married filing jointly double the brackets for singles, those married couples who currently enjoy the “marriage bonus” would get an even bigger bonus.

I don’t understand why Congress can’t just make the married filing separately brackets the same as the single brackets, and then let couples choose whether to file jointly or separately. Couples who currently enjoy the marriage bonus would continue to file jointly and enjoy the same bonus they have now. People who are currently subject to the marriage penalty would file separately and be taxed the same way they would if they were single. Of course, Congress would have to come up with rules for splitting deductions (which they have to have now anyway for couples who file separately), but it should be doable.

 

[zhuzhu]

Thanks Kay for sharing your professional knowledge with us. I really appreciate it!!!