TaxAct claims that my wife and I can probably save around $500 by filing separately. Ironically enough, it seems completely unable to actually handle such a return. It will only allow me to enter my W-2 information, even though I'll actually need to use 50% of our combined incomes. (We live in Texas, so just about everything is community income.)
TurboTax seems to have the same limitation.
Anyone know of a site that doesn't suck like this?
Thanks!
Is Taxact's claim based on community property rules, or separate property rules? Perhaps it is not taking your specific situation into account.
Hmm, sounds like they missed a competitive advantage.... ;-)
If you find a site that auto-magically applies community property rules to taxable income on a MFS return, please let the group know. I'm guessing there's no money to made on such software, or someone would have done it by now (or at least made a valiant effort).
On a related note, I'm looking for software that will take a pseudo-MFJ return, and optimize the federal credits and deductions as if the taxpayers were filing unmarried, and there are children (both are parents) so at least one will be Head of Household (HOH) on the federal return, and they all live in the same house.
-Mark Bole
My recollection is that federal law allows you to file separate returns on your individual incomes irrespective of community property laws. Federal law would supercede state law in this regard.
Stu
Stu, sorry to disagree, but I believe the answer is:
No, you cannot disregard state community property laws, unless the community has clearly ended and the spouses lived apart the entire year, or at least from the time the community ended.
In the latter case, there appear to be a few exceptions that avoid the normal drawbacks of filing MFS (such as taxability of Soc. Sec. income, etc).
See IRS Pub 555 for details on the federal tax treatment of MFS taxpayers in community property states.
"Community or Separate Property and Income "If you file a federal tax return separately from your spouse, you must report half of all community income and all of your separate income. Generally, the laws of the state in which you are domiciled govern whether you have community property and community income or separate property and separate income for federal tax purposes."
-Mark Bole
Their "wizard" asks you to allocate your various bits of income and deductions. IIRC, they also give you a few hints along the way.
I'm not looking for anything automagic. I'd just like to be able to enter (or automatically download) both of our W-2s and then tell the program to allocate them 50/50. The way programs seem to work, I'll have to create one or more "fake" W-2s with manually adjusted numbers.
"Ian Pilcher" wrote
See if you can enter the W-2 as joint income. Does it give you the option other than "T" or "S" ???
Upon looking at my software, it does not have that ability to input joint wages. Nearly everything else can be jointly assigned - interest, dividends, capital gains, etc and so on.
Maybe force the split by creating two W-2's with half the income and withholdings for each spouse?
Head of Household is not available to a married taxpayer who lives with his/her spouse.
Ok I missed the "as if the taxpayers were filing unmarried", but that makes me wonder what the point is?
They're not married. That's why I said "pseudo-MFJ" return. As mentioned in another recent thread, such taxpayers have lots of planning opportunities to arrange for who pays, and takes deductions for, certain joint expenses.
-Mark Bole
Primarily to maximize deductions for the one with higher AGI, and credits for the one with lower AGI.
-Mark Bole
BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.