when does it make sense to file separately?

[texastepmom]

What is the name of your state? texas

My husband and I married in 2005 and have been paying higher taxes since then (it put us in a much higher tax bracket) we make pretty close to the same amount (maybe 40/60), and this year we will not be able to have any dependant deductions (deducted SS in previous years). we have mortgage interest, real estate tax, and home improvement loan interest as deductables.

I know the general answer is that is "usually" is better to file joint, but when is it better to file separate? if we file separate, who deducts the interest and taxes? i realize we both have to itemize our deductions if we file separate.

would filing separate help with the economice stimulus tax refund? when i ran the numbers we would get about $300 for both of us to file joint.

thanks for your help!


ok - edited to add:

i was looking up info and texas is a community property state and it appears that we have to split both our income and our deductions on our taxes, is this correct? so can i just take half of our income and deductions and quickly run the numbers and see if we would pay less, both our filings would be the same? i'm so confused as to why texas has a say in how we file our federal taxes, esp. since there are no state taxes in texas.

[LdiJ]

Originally Posted by texastepmom

What is the name of your state? texas

My husband and I married in 2005 and have been paying higher taxes since then (it put us in a much higher tax bracket) we make pretty close to the same amount (maybe 40/60), and this year we will not be able to have any dependant deductions (deducted SS in previous years). we have mortgage interest, real estate tax, and home improvement loan interest as deductables.

I know the general answer is that is "usually" is better to file joint, but when is it better to file separate? if we file separate, who deducts the interest and taxes? i realize we both have to itemize our deductions if we file separate.

would filing separate help with the economice stimulus tax refund? when i ran the numbers we would get about $300 for both of us to file joint.

thanks for your help!


ok - edited to add:

i was looking up info and texas is a community property state and it appears that we have to split both our income and our deductions on our taxes, is this correct? so can i just take half of our income and deductions and quickly run the numbers and see if we would pay less, both our filings would be the same? i'm so confused as to why texas has a say in how we file our federal taxes, esp. since there are no state taxes in texas.

Texas itself does not have a say, but the fact that it is a community property state means that federal tax law looks at things differently.

You federal stimulus will be at least 600.00 if you are married filing jointly. 300.00 each for you and your wife. If the amount showing line 44 of your 1040 is more than 600.00 but less than 1200.00 you will receive whatever amount shows on line 44. If line 44 is 1200.00 or more, you will receive 1200.00. Therefore no, filing separately will have absolutely no effect on your stimulous.

Its also unlikely to have much, if any positive effect on your taxes, but you can certainly run the numbers both ways if you want to.

[texastepmom]

thanks for the response LdiJ... i just want to make sure i understand - when i run the numbers for married filing separately, i will put down the same income and deductions for each of us (considering our income and our deductions are "community property") is that correct?

another question, we are going to withold more on our W-4 this year - there is a box for single, married, and married but withold at the higher single rate... if i check the last box will they withold more? i know that seems like a no brainer question, but considering we are paying more taxes since we got married, it seems ironic to me.

i don't want to get stuck with 2 grand in taxes again next year, that hurts when we've always gotten a refund in the past.

also, does anyone know how to get tax cut to automatically calculate your taxes for joint and for separate?

thanks so much.

[LdiJ]

Originally Posted by texastepmom

thanks for the response LdiJ... i just want to make sure i understand - when i run the numbers for married filing separately, i will put down the same income and deductions for each of us (considering our income and our deductions are "community property") is that correct?

another question, we are going to withold more on our W-4 this year - there is a box for single, married, and married but withold at the higher single rate... if i check the last box will they withold more? i know that seems like a no brainer question, but considering we are paying more taxes since we got married, it seems ironic to me.

i don't want to get stuck with 2 grand in taxes again next year, that hurts when we've always gotten a refund in the past.

also, does anyone know how to get tax cut to automatically calculate your taxes for joint and for separate?

thanks so much.

Yes, if you check the last box they will withhold more than if you check the married box.

I have absolutely no idea if Tax Cut gives you the option of doing that. Use another online service to run the numbers separately if Tax Cut doesn't do it....or go see a tax pro.

However, I honestly think that you are spinning your wheels.

[texastepmom]

thanks again LdiJ... i probably am spinning my wheels, that wouldn't be the first time, but at least i'll "know" that i did everything i could. our taxes are very simple so it shouldn't take long.

am i right in thinking that i have to claim each of us with 1/2 our total income and 1/2 our total deductions bacause we are in a community property state?

thanks again.

[LdiJ]

Originally Posted by texastepmom

thanks again LdiJ... i probably am spinning my wheels, that wouldn't be the first time, but at least i'll "know" that i did everything i could. our taxes are very simple so it shouldn't take long.

am i right in thinking that i have to claim each of us with 1/2 our total income and 1/2 our total deductions bacause we are in a community property state?

thanks again.

Basically yes, which is what makes it complicated. You would really be better off seeing a tax pro.

[texastepmom]

Originally Posted by LdiJ

Basically yes, which is what makes it complicated. You would really be better off seeing a tax pro.

why does that make it complicated? seems like it would make it easier... just divide everything by two...

[LdiJ]

Originally Posted by texastepmom

why does that make it complicated? seems like it would make it easier... just divide everything by two...

The software may not cooperate with you too well about that.

[texastepmom]

ahh... i see what you mean... i'll see what i can do, i found out how to file joint federal taxes and separate state taxes, so it seems there would be a way to look at this both ways, i'll play around with the program this weekend.

thanks for your help, i do appreciate it!