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Subject:  Married Filing Separately - HELP! Date:  2/21/2000  4:33 AM
Author:  stockmover Number:  29427 of 127753

I am in need of some sound tax advice regarding my 1999 federal tax return. I am using Turbo Tax 1999 (TT) software which I am very familiar with since I've used it the past several years.
However, this year when I used the TT "What If" worksheet it showed that it would be much more advantageous for my wife and I to file as Married Filing Separately rather than filing Jointly as we have in the past.

My wife and I both live in Arizona - a community property state, but I do not live with my wife nor did I any time during 1999. Sad but true.

The problem I am dealing with is how to properly allocate our income and itemized deductions between both of our returns without triggering an IRS audit. It is to our benefit to itemize our deductions on both returns and we both have an adequate amount of deductions we are entitiled to take. However, if I just split all of our income and deductions on 50/50 basis, I am leary that we may very well be subjected to an Audit because of none of the amounts shown on the W-2's, 1099's 1098's etc. will match the amounts shown on each of the separate returns unless they are combined together by the IRS computer tax program. In addition I have the following income and deduction items which are either difficult to split [Sch D for example] or just doesn't seem proper to split:

> My 1999 IRA Contribution
> My Social Security Benefits
> My Short & Long Term Capital Gains

I am considering allocating all of our income and deductions based solely on the Social Security Number under which the item was reported to the IRS. That way there should be no IRS computer matching problems and it generally reflects our true individual income and deductions! To me this makes more sense and seems proper, but at the same time I know the tax laws don't always make sense!

I would appreciate any advice on how to handle this problem from any and all of you knowledgeable Fools.

Thanks :)

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