401k-marital or not

[i2mscrewed]

New Mexico

STBX's attorney sends a letter to me which states that STBX stopped paying into 401k when we got married; therefore, it's all his. But 401k statement shows over $500,000 during marriage. STBX says corporation paid in for him, it wasn't out of what he pays himself, so he says it isn't marital. I say he's full of it. Anyone have any thoughts on this matter? Any replies of "Get an attorney" or anything re-worded to that effect need not reply. That's an obvious, already have one. I'm just inquiring in the wee hours, in case any one knows, because I don't think my attorney will find waking up to answer this at this time, very humorous.

One other question...what about taxes? Am I entitled to claim half his income to file? He told me that it is none of my business and that he had already filed. Can he do this without me? Much less, is this legal? And, how can he pass through the S corp's taxes to the marriage without me? Thankyou....

 

[LdiJ]

New Mexico

STBX's attorney sends a letter to me which states that STBX stopped paying into 401k when we got married; therefore, it's all his. But 401k statement shows over $500,000 during marriage. STBX says corporation paid in for him, it wasn't out of what he pays himself, so he says it isn't marital. I say he's full of it. Anyone have any thoughts on this matter? Any replies of "Get an attorney" or anything re-worded to that effect need not reply. That's an obvious, already have one. I'm just inquiring in the wee hours, in case any one knows, because I don't think my attorney will find waking up to answer this at this time, very humorous.

One other question...what about taxes? Am I entitled to claim half his income to file? He told me that it is none of my business and that he had already filed. Can he do this without me? Much less, is this legal? And, how can he pass through the S corp's taxes to the marriage without me? Thankyou....

That's total BS on the 401k. Yes, he is allowed to file his taxes without you.

 

[i2mscrewed]

That's total BS on the 401k. Yes, he is allowed to file his taxes without you.

On the first: That's what I thought. On the second: Even though we are still married? I thought in a community property state that I could file on half of his income and split appropriate deductions; and he still would have to file married but filing seperate, would he not? If not, how do I file and what? After all, the income is considered marital... don't I have a right to see the taxes? and half the return?

 

[ceara19]

On the first: That's what I thought. On the second: Even though we are still married? I thought in a community property state that I could file on half of his income and split appropriate deductions; and he still would have to file married but filing seperate, would he not? If not, how do I file and what? After all, the income is considered marital... don't I have a right to see the taxes? and half the return?

You each have the right to file seperately. He will use HIS income on his return and you will use YOUR income on your return. Unless your name is on his W-2, you cannot list his income as yours. You may be entitled to a portion of any refund he may receive, you will need to ask your attoreny about that.

 

[i2mscrewed]

You each have the right to file seperately. He will use HIS income on his return and you will use YOUR income on your return. Unless your name is on his W-2, you cannot list his income as yours. You may be entitled to a portion of any refund he may receive, you will need to ask your attoreny about that.

Thanks for helping anyways. I just had a feeling there was something different done in New Mexico. Being a community property state makes a big difference in how things are handled. I did a little research myself and found from Mark A. Masley, Attorney at Law, "The Divorce Handbook" and I quote directly from his book:

"When filing a separate return, you will of course report only your income, exemptions, credits, and deductions. If your spouse did not work, you may claim an exemption for him/her. This, however, is slightly different in the Community Property States. Generally speaking, in these states, income earned and assets acquired during the course of the marriage are theoretically owned 50-50 by both spouses and is therefore considered to be "community property". Before choosing to file separately in a Community Property States, it is best to seek the advice of a tax professional. In addition to claiming separate income and deductions, you will most likely have to report half of the "community income" and claim one-half of the "community deductions". In determining just what is a community deduction, the rule of thumb would be if the expense in question was paid for out of community funds, then each spouse will file half the amount on their individual tax return."

Of course that may be easier said than done...if the spouse won't give you any information or tax paperwork to do this. I wonder...would a court order be appropriate here?

Thanks---

 

[ceara19]

In community property states, each persons EARNED income is theirs only to claim. Income from investments, dividends, etc. and certain deductions are considered to be joint. Therefore, entitling each party to claim 50% of those assets or deductions. But like I said earlier you MAY be entitled to a portion of any refund he may receive. You'll need to check with your attorney.

 

[i2mscrewed]

In community property states, each persons EARNED income is theirs only to claim. Income from investments, dividends, etc. and certain deductions are considered to be joint. Therefore, entitling each party to claim 50% of those assets or deductions. But like I said earlier you MAY be entitled to a portion of any refund he may receive. You'll need to check with your attorney.

This is straight from the "horse's mouth" (IRS):

"If you are married but file a separate return, you can take credit only for the tax withheld from your own income. Do not include any amount withheld from your spouse's income. HOWEVER, DIFFERENT RULES MAY APPLY IF YOU LIVE IN A COMMUNITY PROPERTY STATE.
The following are community property states:

Arizona,
California,
Idaho,
Louisiana,
Nevada,
New Mexico,
Texas,
Washington, and
Wisconsin.

If you live in a community property state and file a separate return, you and your spouse must each report HALF OF ALL COMMUNITY INCOME IN ADDITION TO YOUR OWN SEPARATE INCOME. Each of you takes credit for half of all taxes withheld on the community income. If you were divorced during the year, each of you generally must report half the community income and can take credit for half the withholding on that community income for the period before the divorce".

Unless I am reading it wrong...I think that means that I will have to file on half of the income...considering that wages are considered community income in a community property state.

 

[ceara19]

This is straight from the "horse's mouth" (IRS):

"If you are married but file a separate return, you can take credit only for the tax withheld from your own income. Do not include any amount withheld from your spouse's income. HOWEVER, DIFFERENT RULES MAY APPLY IF YOU LIVE IN A COMMUNITY PROPERTY STATE.
The following are community property states:

Arizona,
California,
Idaho,
Louisiana,
Nevada,
New Mexico,
Texas,
Washington, and
Wisconsin.

If you live in a community property state and file a separate return, you and your spouse must each report HALF OF ALL COMMUNITY INCOME IN ADDITION TO YOUR OWN SEPARATE INCOME. Each of you takes credit for half of all taxes withheld on the community income. If you were divorced during the year, each of you generally must report half the community income and can take credit for half the withholding on that community income for the period before the divorce".

Unless I am reading it wrong...I think that means that I will have to file on half of the income...considering that wages are considered community income in a community property state.

You are reading it wrong.
HALF OF ALL COMMUNITY INCOME
This would be any income from shared, community assets, such as rental property, investments, dividends, interest.
IN ADDITION TO YOUR OWN SEPARATE INCOME
This is the income that each INDIVIDUAL PERSON earned from WORKING. You DO NOT get to use the money that your spouse EARNED BY WORKING. The W-2 for the income he EARNED BY WORKING ONLY has HIS name on it. YOUR NAME will NOT be on the W-2, therefore, you cannot use ANY income on HIS W-2 as income on YOUR tax return.

LdiJ had already given you the short answer on this. This is the THIRD time I have explained the SAME thing. Maybe LdiJ can come back and give you a more detailed answer, which will essentially be the answer you have already gotten. Since she is a CPA (as I understand it), maybe you would take her word on the subject.

 

[LdiJ]

What I think would really be better for this poster to do, is to go get a consult with a tax professional in her area. She isn't understanding what is being explained to her here, and I think that perhaps she would do better in a face to face discussion.

I am not a CPA. I should have sat for the exam years ago however, it really wasn't important to me at the time. Then, when I was ready to take it I discovered that my state had changed the requirements and you had to have a master's to sit the exam. So, I am now working on my master's (one class at a time LOL) and when I am done I will sit the exam.

 

[ceara19]

I knew you were very knowledgeable when it came to tax laws. Thanks for the correction.

 

[i2mscrewed]

You are reading it wrong.
HALF OF ALL COMMUNITY INCOME
This would be any income from shared, community assets, such as rental property, investments, dividends, interest.
IN ADDITION TO YOUR OWN SEPARATE INCOME
This is the income that each INDIVIDUAL PERSON earned from WORKING. You DO NOT get to use the money that your spouse EARNED BY WORKING. The W-2 for the income he EARNED BY WORKING ONLY has HIS name on it. YOUR NAME will NOT be on the W-2, therefore, you cannot use ANY income on HIS W-2 as income on YOUR tax return.

LdiJ had already given you the short answer on this. This is the THIRD time I have explained the SAME thing. Maybe LdiJ can come back and give you a more detailed answer, which will essentially be the answer you have already gotten. Since she is a CPA (as I understand it), maybe you would take her word on the subject.

Thankyou ceara19, I understand it now with your longer explanation and interpretation of the law. Sorry I wasn't snapping to what you were getting at. I really appreciate the help. I know that you have better things to do with your time and more people to help, so I understand your frustration with me. Once again, I apologize and thankyou for clearing this up. You outdid yourself in once again helping another of the many.

 

[ceara19]

Thankyou ceara19, I understand it now with your longer explanation and interpretation of the law. Sorry I wasn't snapping to what you were getting at. I really appreciate the help. I know that you have better things to do with your time and more people to help, so I understand your frustration with me. Once again, I apologize and thankyou for clearing this up. You outdid yourself in once again helping another of the many.

Not a problem. Just make sure you check with your attorney to see if he will have to give you part of any refund he may get!

 

[Texas_P1]

New Mexico


One other question...what about taxes? Am I entitled to claim half his income to file? .

Why would you want to? Claim have of his income,that is. I am in the same situation, trying to figure out how to file. My wife made about 20k this year (more than she ever has) yet she has no federal taxes taken out. So any refund we get is based on the taxes that were deducted from my check. I talked to a pro***** and they said that If I was to file HoH I would have to take half of her income and add it to mine, that kinda defeats the puropse of filing HoH. So, this is the reason I ask you why you would want to be entitled to have that income as taxable.

 

[Texas_P1]

You are reading it wrong.
HALF OF ALL COMMUNITY INCOME
This would be any income from shared, community assets, such as rental property, investments, dividends, interest.
IN ADDITION TO YOUR OWN SEPARATE INCOME
This is the income that each INDIVIDUAL PERSON earned from WORKING. You DO NOT get to use the money that your spouse EARNED BY WORKING. The W-2 for the income he EARNED BY WORKING ONLY has HIS name on it. YOUR NAME will NOT be on the W-2, therefore, you cannot use ANY income on HIS W-2 as income on YOUR tax return.

Well, this is not what a tax attorney just told me. He told me her income and mine is considered "community income" whether as you say the other person name is on it. You both DO "get to use the money that your spouse EARNED BY WORKING". Whether or not you actualy see it, as a community state it goes into a "imaginary" pot. So, if your husband files anything else besides married filing sep***** he is wrong. And you have to do the same.

 

[i2mscrewed]

I thought so....