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Author: progmtl Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121096  
Subject: Re: Married: File Joint or Separate Date: 3/28/2014 8:56 AM
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There are many tax benefits which are eliminated or severely reduced for MFS returns. It is very unusual for MFS returns to be better than MFJ except for those who live in OH.

We are in CT. I haven't looked at the state return yet to compare MFJ and MFS.

It's possible that the H&R Block worksheet is not calculating something correctly. In fact, I compared the amount of tax owed by each of us in the MFS case to the IRS tax tables based on taxable income and the values seem to be off by a little bit. I will probably have to go through the process of filling out whole separate returns to find out for sure.

But in our case it may make sense that we pay less tax when MFS. I found online a list of deduction/credits which you can't take as MFS - pretty much none of them apply to us anyway. When we MFJ, we end up having AMT, and I think that kills all our itemized deductions. When I switch to MFS, neither of us hits the AMT barrier, so suddenly we get our deductions back. The three big deductions for us are real estate taxes, mortgage interest, and state income taxes. So not having these deductions in the MFJ case hurts us a lot, and getting them back by MFS is a big plus. We are in CT, so non-community property state.

Any income or deductions which naturally belong to only one of us I am allocating to that person. But we have some that seem to be joint:
- interest on joint savings accounts
- dividends on joint investment accounts
- income from last year's tax refund (MFJ)
- deduction for mortgage interest and real estate tax - house owned as joint tenants
- state income tax (might have to be divided for who incurred what amount)

So I guess most of these joint things should just be split 50/50? Or do I have the flexibility of using them where they help us most?

thanks,
-progmtl.
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