Filing Separately Vs Filing Jointly
Question: Filing Taxes Married; Separate vs. Joint?
Hello,
I became married in mid-December, 2007. My wife is immigrating from Mexico, and is currently adjusting her status to permanent resident. She had no income last year, neither here nor in Mexico. She does own and rent a house in Mexico, and has been receiving $500 in rent since last September (this money is deposited to a Mexican bank account; she does not have a US bank account yet). She does have a social security number already.
I earned around 40k last year, do not own a home, and have no significant assets (5k in the bank). My wife lived with me for around 4 months last year, and I supported her during that time. I understand this is not enough to claim her as a dependent.
Should I file married jointly with her, or separately as just me? She will obviously not be filing by herself. I understand that I could also file separately, and use her exemption.
Any advice would be greatly appreciated. Thanks!
Answer: While your wife has $5000 of gross income (the rent), she doesn’t have any US source income.
If you file MFS, you can claim her exemption on your return. That would be $3400 less in income. For this, you need an SSN or an ITIN.
If you file MFJ, you would add a statement that she wishes to be treated as a resident for the entire year. You would include the rental income/expenses. If she paid income taxes to Mexico on it, you may be able to take a credit on form 1116.
We can’t tell you the best way to file. Try it both ways.
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Question: Filing Taxes jointly or seperatly?
My husband, daughter, and I just recently moved to California from Texas. My husband is in the military, and I just wanted to know if they take more money when you file jointly? I have had some people say I should file separately because I will get more money back. I don’t know if filing taxes in California is any different than Texas but I just wanted to see if anyone had any suggestions for me. We are just trying to get as much money back as possible! Thank you!
Answer: yea they do
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Question: Married Filing Jointly. How does the $10,700 deduction apply to our income tax?
According to the 2008 tax rates & brackets for “married filing jointly with combined income of $105,000,” our tax is $8,962 plus 25% of the amount over $65,100.
This comes out to $8962 + $9975 = $18,937.
Is the $10,700 deduction applied to the $18,937 or is the deduction subtracted from our gross income of $105,000?
Also, we plan on buying a home in Jan/Feb 09. If we paid a total of about $20,000 in mortgage interest next year, will there be a significant tax benefit? Assuming our income is unchanged and we have no other deductions or allowances. Thanks.
Answer: From your total income you will subtract certain deductions such as student loan interest and IRA contributions if they apply to you. From that number you will subtract the standard deduction of $10,700 plus the one personal exemption of $3500 for each member of your household. Assuming there are just two of you, your Taxable Income would be $105,000 – 10,900 – 7000 for a total taxable income of $87,100. The tax on $87,300 would be $14,469.
More importantly is your statement about buying a house. Under the new tax law just passed if you purchase your first home between 4/8/08 and 7/01/09 you are eligible for the first time homebuyers credit. This credit if a refundable credit of up to 10% of the purchase price of the home or $7,500 whichever is smaller.
Because you are purchasing this home in Jan/Feb 09 you have the option of claiming the credit on either your 08 or 09 return. So, even though you didn’t close by the end of the year, you could still claim the credit. Just make sure you close on the home before you file the return. If you don’t you would be able to amend the return to claim the credit.
Here’s the catch. The credit needs to be repaid at the rate of $500 per year for the next 15 years. This amount will come out of your future refunds or added to your future liability.
To answer the last part of your question, yes, $20000 in mortgage interest would have a significant impact on your next return.
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Why do you think that is a rule (Section 63(c)(6)) that if you are married and file separately and one spouse elects to itemize their dections the other can not take a standard deduction?
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Question: Married, file Separately, who can claim the house?
My wife and I seem to be up in the next tax bracket by Filing Jointly. We would like to file separate but who can claim her son (is 18 but a senior in high school), my step-son, and who can claim the mortgage interest?
Thank you.
Answer: As a married couple, you are entitled to claim both sons and mortgage interest. When married filing separately, It’s your choice as to who claims what. One or the other can claim all, one can claim one son and one the other son or you can split everything 50-50. You’ll need to estimate the cost of taking the deductions in all the various permutations to see which results in the least tax liability.
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