Post # 1
To those who got married this year, how do you plan to handle your first tax return? We got a prenup to keep our property seperate and planned to file as married filing seperately- then had a brief panic when it looked like our state was going to consider our salaries community property anyway. Of course, this same state has no state income tax, so there was very little on the internet on community property that didn’t refer to divorces. I finally found a rather lengthy opinion on community property law that seemed to indicate our prenup would trump the requirement to split our income between us on our federal returns (treating our income as community property would have become even more complicated in our case by the fact that he is in the military, that both of us vote, have driver’s licenses, and otherwise consider our state of residence to be our individual home states, not the state we currently reside in, and much of his "income" is non-taxable- especially when he’s deployed).
Married filing seperately doesn’t net us any huge tax break anytime soon, since we make about the same amount of money (his year, anyway). But then, as I was moments from breathing a huge sigh of relief, I read on and discover a whole list of reasons why filing our taxes on a joint return (if not actually combining our assets) might be inevitable… namely, the huge list of deductions, like the Hope and Lifetime Learning credits and child care expenses and interest on student loan payments, that you can deduct from your taxes if you are single or married filing jointly- even if you are taking the standard deduction in some cases! But you can’t claim any of them if you file seperately.
Why does the government make it so difficult to do the responsible thing and keep our finances seperate by denying us of legal entitlements everyone else in the country can take- married or single? I just found out that as long as we file seperately, I can’t even open the Roth IRA I was planning to start next year in order to save for a down payment on our first house and (with the interest for our future retirement). I guess we have until April to figure this out- but I’d welcome advice from anyone who has even an inkling about my confusion over how marrying the love of my life so we could live happily ever after got so darned confusing as soon as the IRS got involved!
Post # 3
I’d contact the lawyer and see if married filing jointly would blow your prenup. (I’m an accountant and don’t give legal advice). For most couples there is a definite tax benefit to married filing jointly. There is no point in questioning the logic of the income code because you’ll go crazy.
The only time I’ve recommended separately is if you are uncomfortable with the veracity and substantiation of the other parties (your husband’s) tax information. That gives you some protection if the IRS questions a position later. I have seen couples with prenups file jointly – but I know some of this varies with state law (community property, district rulings, etc). There’s a good chance that if you got an answer here it would be the wrong answer (someone could give you the right answer for Utah – but the wrong answer for where you live) – so call your lawyer.
Post # 4
I know this sounds very silly, but go to H&R Block. Just make sure you ask for a tax pro that is experienced in this area- they often have people that work there for 15-20 plus years… They will give you free advice & you aren’t required to file your taxes there. Just look in the phone book and look for the district office phone number- they are typically open year round.
Post # 5
Oh- it won’t make much difference this year- Right now, we both work and have similar incomes, so there is no real tax benefit to filing seperately… but for work reasons, we also live and maintain our expenses seperately right now, and filing seperately is a logical extension of that.
We would probably be filing seperately anyway, because of something a family member experienced- being held liable for back taxes after her husband filled out the return, but never sent it or the check to the IRS.
At least until we’ve been married a bit longer, we’d like to work into combining assets and income gradually.
I wasn’t really looking for advice, more wondering if anyone else has ever been shocked to learn of some unintended implication of being married.
We put a lot of work into writing our prenup in a way that was comfortable for us both- deciding about how we handle our finances now, or how we will if one of us is unemployed, once we have children, buy a house together, and so on.
But it never occured to either of us to look into all of the absurd ways our marriage would affect our TAXES. You would think that married filing seperately would be roughly the equivalent of filing as if you were single- and it isn’t at all! The fact that we have to both synch up whether we will itemize or take the standard deduction alone was a surprise- learning we will actually be denied benefits we had access to as a single person and would have access to if we were married filing jointly is kind of a shock.
Filing jointly won’t affect our prenup at all, and was probably something we’d have moved to sooner or later- but it really isn’t something that we were expecting to be forced into.
Post # 6
(oh- deducting interest paid on my student loans. Child care expenses, I can handle, but not being able to deduct interest I paid with my money on loans I took out before I even married? THAT is high on my list of things I can’t do if I file seperately that are ticking me off right now).
Post # 7
I used to do tax returns for individuals before I changed jobs and in my experience, filing joint is usually more beneficial than filing seperately. When filing seperately you do tend to lose out on a lot of deductions and credits, plus when it comes to children it’s even more difficult. I’ve never heard of a prenup playing any role in a tax return, but to get the most bang for your buck, have your accountant run the tax return both ways – joint and seperate. You’ll see the difference and although it may cost you a little extra in accounting fees, it may be well worth the money. Oh and I wish I lived in a state with no income taxes!!!!
Post # 8
Well if it makes you feel better the loan interest isn’t deductible if you make over $135,000 joint and phased out starting at $105,000. So you might not have qualified jointly either.