Today TaxMama hears from Sylvia, who has a quick question, “Hubby and I have joint CDs. However, some are under his Social Security number and some mine. In the past I’ve not been separating them when filing tax… Should I?”
That’s a good question.
Since you’re married and planning to stay that way, we all know that what’s yours is yours, and what’s his is also yours. So what’s the point of splitting them up?
I had to pause and think about this for a moment. After all, the last thing I want to do is to cause a split of any kind in a good relationship. So, are there any good reasons to separate the income? Actually, yes.
First of all, if you identify each item as ‘filer’, ‘spouse’ or ‘joint’, you’ll be able to make married filing jointly vs married filing separately calculations easily.
You won’t always need to – but in a year when one of you has large medical bills and the other doesn’t; or when one of you has large job-related expenses, and the other doesn’t – there may be advantages to filing separate tax returns.
What else? Hmmm…there might be some planning elements involved if one of you is in business.
Another thought – If you got married later in life and want to keep your assets separated for your children from a previous marriage. And you want to establish a history of which assets are whose.
Or if one of you has debts or tax debt and don’t want to lose all of the family’s assets – it’s wise to identify assets and income as his and hers.
And of course, some states look at filer’s and spouse’s incomes separately.
And besides, it doesn’t hurt to see who does a better job picking better performing savings and investments. It could be a fun game, to track each other’s investment acumen each year! Loser does the housework for a week!
And remember, you’ll find answers to questions about income splitting and all kinds of tax issues, free. Where? Where else? At TaxMama.com[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips. Please click on the subscribe link and join us.]
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