Dividing a loan payment between two parties

"Mr.Jan" wrote in news:1a839ebe-8c17-4899-9fa6- snipped-for-privacy@m1g2000yqo.googlegroups.com:

You have a joint checking account, but still want to allocate payments to your mortgage holder 50:50? It seems that at the end of the (year or mortgage or relationship) all you have to do is divide the total payments by 2 and voíla, there are both your shares. Same with a running total.

Probably you should get qualified professional advice regarding a tax and legal problem, just to be sure there won't be hassles some time later on.

That is a way of doing it but I was interested in finding a way of splitting that transaction.

One issue is that we tend to make unequal contributions to the checking account.

1. We are on different pay cycles.
2. We allocate our paychecks differently.
3. We like different levels of "cushion" in the joint account.

What I want to do is run a report on the TAGs that show how much of the checking account is "mine" and how much is "hers". I already do this in EXCEL but I should be able to do it in Quicken. Obviously, cable, electric, water, etc. is easy to record as a split transaction with percentages but I wish there were a different way to split the loan and still get the LOAN functionality of Quicken.

This is not really an accounting question. It is a bookkeeping/Quicken functionality question. We have been doing this for years in our spreadsheet and it works fine. Thanks

"Mr.Jan" wrote in news:40a5ca4c-a808-453f-a51a- snipped-for-privacy@q22g2000yqm.googlegroups.com:

I could do something like this in a test. From the loan account (!!!) enter the payment amount as a deposit, let's call it Mortgage and assume a total of $2000. Then split this 40:60 (or whatever) as a transfer from Checking, let's say $800 from Checking/Alice (the tag) and $1200 from Checking/Jan (the other tag). This will then (after hitting enter the requisite number of times) show up as 2 transactions in checking. You may have made out a $2000 check for this set of transactions, so watch with the reconciliations. Also, I don't know what the lawyers or the IRS will say. That's a question for misc.taxes.moderated

Hmm. If I understand, I would have 2 entries in checking rather than the one they actually pull.

The more I think about it, the more I think setting up two loans for

No problem with the IRS. They are used to partnerships who allocate expenses. As long as we don't go over 100% of the interest (and taxes) and we have some kind of justification. That is the easy part.

Time to get married. Voila. No problem as marriage is SUPPOSED to be a total union INCLUDING finances.

IRS will soon consider you to be MARRIED as in common-law. Period.

Seems a bit extreme to solve a Quicken problem. We have discussed marriage but the tax increase for our combined incomes is prohibitive.

Why would the IRS consider us married? Separate names, separate finances, separate careers. We share some expenses and went in together to buy a house in the Washington DC area. Still one of the most expensive in the country. Many people have to do that here. I believe Virginia does recognize common law but the key metric for that is to present yourself as married. We certainly do not. Besides, what does that have to do with a Quicken setup question?

Hi, Jan.

I believe Sharx35 lives in Canada. Canadian rules may very well be different from the USA. The IRS honors the law of the state where the taxpayer resides - and there are more than 50 of those, including DC, Puerto Rico, etc., in the definition of "state" for this purpose. The taxpayer's marital status on the last day of a taxable year determines his/her marital status for tax purposes for that entire year. With a marriage certificate, the date is easily verified. I've never dealt with a common-law marriage question, so I don't know how the effective date of that marriage is determined.

Doesn't matter to the IRS.

Doesn't matter.

Doesn't matter.

Doesn't matter.

Still doesn't matter.

Married couples do these things regularly. So do many unmarried couples.

IF your resident jurisdiction considers you married on the last day of your tax year, then you are eligible to ELECT to file a JOINT income tax return. But you may still elect to file as MARRIED filing SEPARATELY - the most expensive rates in the book. IF your local law considers you to be married, you may NOT file as SINGLE for that year. (ALL CAPS are not intended as SHOUTING, but only to emphasize the key words - including the IFs.)

Back to your original question, Jan: Why not use three bank accounts: His, Hers and Theirs. Only Theirs would be a joint account. Transfers from His and Hers accounts into Joint could be kept equal, while separate expenses could be paid from the separate accounts.

As I've often mentioned here, I've been retired for nearly 20 years and tax rules change often, so be sure to check with your own CPA to be sure that this information is current.

RC

Thanks. We do use his, hers, and ours accounts. We agreed early on that we do not want to co-mingle our finances. The question I posed is to keep the "ours" account straight. There are many reasons one party has a different balance in the "ours" account than the other and we had never designed our expenses to be totally 50/50. We use the

As far as being considered COMMON LAW married, you are correct that the IRS would use the Commonwealth of VA determination and we don't meet that criteria to be defined as married in the eyes of the commonwealth. We also each file as single. I think you understand, we don't WANT to file jointly but I wanted to state that just to be sure. I was responding to a previous post who declared that we would be considered married by the IRS.

This whole thing started because I asked if there was a way of dividing interest and principle for one loan between two parties without editing each posting. I am trying to keep one payment posting but it was more of an intellectual exercise. Certainly not a tax matter.

Once the IRS discovers that you are living common-law, it'll be 6 of one, half dozen of the other. Why do people try to lie about their TRUE marital status? The tax authorities, in the end, find out and assess penalties RETROACTIVELY, with compound daily interest. Time to fess up and do full disclosure with them.

Listen up to RC, Mr. Jan. He has it right. Save yourself a LOT of financial grief and be honest in your tax dealings.

I am amazed that my question on how to do something in Quicken has taken this turn. I checked and common law marriage is not recognized in the Commonwealth of Virginia (see below). Tax problem solved.

Mr. Jan

A "common law marriage" is one in which the parties may hold themselves out as a husband and wife, and under certain circumstances, be deemed married without a marriage license or ceremony.

Virginia does not allow the creation of a “common law” marriage, a relationship in which a couple lives together but have not participated in a lawful ceremony. Unlike some other states, in Virginia a couple cannot acquire marital rights and responsibilities by living together for a particular period of time. You do not need legal action to end such a relationship, if it was created in Virginia.

However, Virginia does recognize as valid, common law marriages created in other states if the legal requirements of those states have been met. As a result, legal action is needed to dissolve legal “common law” marriages performed in other states and foreign countries in compliance with their licensing and ceremonial regulations. The courts are available for determining the rights of parties now living in Virginia.

As long as a couple lives together as husband and wife, the question of validity of their marriage is unlikely to arise. However, for purposes of inheritance or the benefits of pension plans or social security, a valid marriage is required.

"Mr.Jan" wrote in news:9e5f6ca0-6f4f-4b09-8b66- snipped-for-privacy@y11g2000yqm.googlegroups.com:

Good for you! (The discussion went this way because we didn't want you or anyone else to paint themselves into a "married" corner)

So, am I given to understand that in the U.S. the IRS actually defers to how INDIVIDUAL states define marriage? In Canada federal law pretty much trumps provincial law, including tax law, aside, possibly in the Province of Quebec which has its own income tax system IN ADDITION to the federal income tax. In Canada, federal tax law says that if you have been together for at least

See what happens when individual freedoms are infringed upon by governments?

I lived in Canada for 18 months. I was not living with someone but the situation did seem to come up occasionally. I admire the Canadian culture and respect its laws but. yes, marriage in "the states" is defined by the state or commonwealth. Hence, single sex marriages are recognized by some and not others.

Now, a different question. If we owned the house jointly with a joint mortgage but lived separately, would you feel the same way? For financial purposes, we are business partners. We just happen to love each other. I suspect in Canada, being married would be an advantage tax-wise and for other areas. In the states, joint income of two equal earners is a detriment.

Go figure.

I suspect I shall simply set up two loan accounts in Quicken with the same due date. The advantage is that either of us can pay off early without affecting the interest calculations of the other.

Mr. Jan, there are various factors at work here. I strongly advise you to get advice from an accredited accountant.