Separate but Unequal

Today TaxMama hears from Mark in MA, with this question: “My tax software suggested filing married separate to save money. Can I use all the itemized deductions with one return, and the dependants on the other? It seemed to work on the software with no alerts.
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Dear Mark,

Sure do-it-yourself software will let you do anything. Does that mean you should?

Not in this case, my friend.

You can certainly get away with putting all the dependents on one return. That’s not going to cause a problem. So, if that results in the lowest tax – sure, go for it.

But putting all the itemized deductions one return and expecting to use the married filing separate standard deduction on the other return? Oh yeah, do that – you’ll be in for a really unpleasant surprise when IRS cross-references the return.

OF COURSE, when you do that you will come out with a lower total tax. You’re picking up an extra $5,350 worth of deductions – to which you’re not entitled. Here is a link to the rule:
https://www.irs.gov/newsroom/article/0,,id=105101,00.html

Hmmm…It’s not clear how the software would know to alert you, if it doesn’t see the other return. Although, I would expect that any tax software worth the price ought to give you an alert when you select MFS, that if your spouse itemizes, you’re not entitled to use the standard deduction.
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At the very least, when you file MFS, there should be this question:

Is your spouse using itemized deductions – yes__ no . With the answer to that, the program should know whether to permit you to use them or now.

Here is a link to IRS information about MFS and itemized deductions

https://www.irs.gov/faqs/faq-kw115.html – FAQs

And remember, you can find answers to all kinds of questions about married filing separately and other tax issues, free. Where? Where else? At TaxMama.com

  • Ask TaxMama :: Where taxes are fun and answers are free
  • www.TaxQuips.com :: The number ONE free tax podcast online
  • IRS.gov :: Married filing separately – itemized and standard deductions
  • IRS FAQs :: Married filing separately or MFS

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