I am retired, my wife works. She has a house in South Carolina and I am moving my state residency to South Dakota as I will be traveling the US for the next few years. We plan to file federal returns as married filing separately. State tax forms, we will file as married filing separately. Is this the proper tax filing procedure? We do not have children. She will be paying the household bills. Does she file as head of household?
thanks for responses in advance.
Joe
Head of household status generally requires a dependent. Since you have no children (I infer no other dependents), the only way she could qualify is if she's supporting her parent(s) household, which does not require the parent(s) to be dependent(s).
Although state income tax filing generally requires using the same filing status as the federal, spouses living apart in different states is one of the exceptions, thus joint federal and separate state filings is a valid combination.
The concern here is whether you actually become a resident of South Dakota if you're going to be transient or continuously travelling away from home for an extended period.... I infer that you are currently a resident of South Carolina.
In order to file as Head of Household, you have to have a qualifying child, and I think you also have to be unmarried.
Just because you live apart doesn't mean you have to file separately. It's very rarely advantageous to file separately. The main circumstances where it's beneficial are:
a) One spouse has very high medical expenses b) Spouses are legally separated and don't want to sign the other's return c) One spouse doesn't want to disclose their finances to the other, and the other is just as happy to not know. d) One spouse is a nonresident alien working in a low-tax jurisdiction (say, one spouse is American and lives in the USA, the other is Canadian and lives and works in Bermuda).
Some states don't even have a "married" filing status. I forget which state it was that I lived in, but the status was "married filing together on this combined return." It was a single form but the tax computation was separate.
There is one other situation where it is usually better to file MFS than MFJ: if you live in OH. While not relevant to the OP's situation, the increase in state tax for filing MFJ is often greater than that at the federal level for filing MFS.
Ira Smilovitz, EA
Not exactly. You don't have to be unmarried; you merely have to live apart for the last 6 months of the (tax) year.
Agreed, although there are situations where there is little disadvantage.
-- Arthur Rubin, CRTP, AFSP Brea, CA
Conventional wisdom is that if both spouses earn about the same amount of money, the may be better off filing separate returns, while if they make very different amounts they will likely be better off filing a joint return. But you can't know for certain unless you run the numbers both ways.
To be precise, you cannot spend even one night together AND the separation may not be due to temporary absence. So, using the facts presented by the OP, if we added a dependent living with the wife in SC, the wife still would not be able to file HoH because the husband's absence was temporary. (That is, there is a presumption that they will resume living together at some future date.)
Ira Smilovitz, EA
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