Tax Tip of the Week | No. 295 | A Closer Look at MFS vs. MFJ

Tax Tip of the Week | March 25, 2015 | No. 295 | A Closer Look at MFS vs. MFJMore about how you file...

A few weeks ago we took a look at Married Filing Jointly (MFJ) vs. Married Filing Separate (MFS). This week we are going to take a closer look on how to properly file these returns.  The basic rule of MFS is that both spouses must claim the standard deduction or take itemized deductions on their respective separate returns. In other words, one MFS taxpayer cannot claim the standard deduction and then allow the other spouse to take itemized deductions.Let's look at some examples:Example 1:  The standard deduction for 2014 for a MFJ return is $12,400. If Jack and Jill elect to take the standard deduction, then each will show a $6,200 (12,400/2 = 6,200) deduction on their respective MFS returns.Example 2:  Jack and Jill have mortgage interest deductions, state and local tax deductions, real estate tax deductions and charitable contributions that equal $20,000.  Since this amount obviously exceeds the $12,400 standard deduction, they will take the itemized deduction on their 2014 tax return. Itemized deductions are then shown on Schedule A of the tax return.  If they decide to file MFS, then their respective Schedule A forms cannot exceed $20,000.Example 3:  We sometimes see taxpayers try to show a $20,000 itemized deduction on Jack’s return and a $12,400 standard deduction on Jill’s return when they file MFS.  YOU CAN’T DO THAT!These are the kinds of mistakes we clean up over the summer months for those that try to self-prepare their tax returns.Don’t be “one of those guys”!You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.Rick Prewitt - the guy behind TTW...until next week.