I am trying to determine the impact of my wife and I filing seperately until the new marriage taxbreak takes effect next year. I've been able to calculate, using TurboTax planner, that if I place all our assets in my name and take all the deductions, our combined tax liability is less than if we file jointly. But I can't find anywhere that this strategy is acceptable by the IRS. Do I have to change the co-ownership of mutual funds and other assets? Can I switch back to joint filing the following year without incurring some awful spanking?Within a few days I'll post a guide to the new rules on spousal liability to my web site, which will include an overview of rules for joint and separate filing.As to your questions, the first thing to know is that you can can elect differently each year as to joint or separate filing if you like. No spanking, awful or otherwise.However . . .1. It strikes me as unlikely that you'll really reduce your taxes this way. Whenever someone says they can reduce their taxes by filing separately I assume they've made an error of some kind, because the circumstances where taxes are really lower on separate returns are very rare (although they do exist).2. If your strategy relies in part on transferring assets from one spouse to another, the transfer has to be legitimate, with no obligation to return the assets at a later time.3. Although there are proposals for relief from the so-called marriage penalty, nothing has been passed and there's no certainty that Congress will enact such a law in the near future. It's a high priority so there's a good chance it will happen, but so far even among the strong proponents of such relief there's no agreement on the proper approach.Kaye Thomas, authorFairmark Press Tax Guide for Investorshttp://www.fairmark.com
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