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e-file married filing separate


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#1 Tax Prep by Deb

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Posted 04 February 2013 - 07:31 PM

Can someone tell me how we e-file a return for married but filing separate? In the past there was a worksheet we filled out on the 1040 e-file but I don't see it this year.

 

Deb!



#2 joanmcq

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Posted 10 February 2013 - 04:13 PM

Form 8958.

#3 Tax Prep by Deb

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Posted 10 February 2013 - 09:38 PM

Yep,

 

I had found it.  But in a community property state like California, how do you prepare the return where only one of them has income?  The wife is the only one who worked and so her's is the only W-2.  I know the form is how I show the separation but how do I change the amount of wages to reflect the 1/2 and how do I reflect the federal withhold to reflect the 1/2 on both returns?

 

Deb!



#4 joanmcq

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Posted 12 February 2013 - 01:14 AM

I use an adjustment on line 21. I'm overriding withholding but on the line 62 worksheet, not the 1040. If you override the 1040, you can't efile. But I'm doing same sex couple returns, not MFS.

#5 Tax Prep by Deb

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Posted 12 February 2013 - 12:05 PM

Thanks,

 

I'm not sure if they are going that route, but I wanted to know how to complete the return if it works out better for them.

 

Deb



#6 jainen

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Posted 14 February 2013 - 07:10 PM

>>I use an adjustment on line 21<<

 

IRS instructions have always said put the allocated amounts directly on the relevant lines of Form 1040.  Otherwise it gets too confusing with tax-exempt interest affecting MAGI, carryovers, etc.  The new Form 8958 is very nice and should make the division clear.  As usual, I recommend doing it the way the IRS expects it to be done.



#7 joanmcq

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Posted 16 February 2013 - 03:32 AM

I'm not doing MFS returns, I'm doing RDPS/SSMC returns. The line 21 adjustment has been the standard by which we in the LGBT tax community have been preparing these. With the new form we're trying different things, and filing with half on each line requires an override on nearly every line. Dividends we can nominee, same with tax exempt interest. Rentals are split into half interests. But also, community income cannot create things like EIC, if one partner has not actually earned the wages. This stuff isn't present in MFS returns.

#8 jainen

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Posted 16 February 2013 - 06:11 PM

>>I'm doing RDPS/SSMC returns<<

 

Pub 555 says, "Each of you must complete and attach Form 8958 to your Form 1040 showing how you figured the amount you are reporting on your return. On the appropriate lines of your separate Form 1040, list only your share of the income and deductions on the appropriate lines of your separate tax returns (wages, interest, dividends, etc.). The same reporting rule applies to RDPs and individuals in California and Washington who are married to an individual of the same sex."

 

When numbers aren't where IRS thinks they should be, then IRS has to look around to find them.  Generally, that's not what we want IRS to do.



#9 joanmcq

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Posted 16 February 2013 - 09:28 PM

I've had no issues with the IRS not finding the numbers in past years.  The issues were more with the IRS saying you can't file with 2 people's income on one return.  Our practitioner's liasion was working directly between the service center and us and even pulling specific returns from exam so notices wouldn't go out in the last two years.

 

Remember in the past, there was no way to coordinate the two returns, except through our own attached spreadsheets.  Using line 21 allows the wages to match the W-2, etc.  I'm currently using a hybrid of the forms, which is allowing me to finally efile.  On my LGBT tax listserve, preparers are trying various methods to determine how best to file.  That this isn't settled is evidenced by the focus groups the IRS are conducting in late February and early March to get in 4 cities to get input from practitioners that prepare at least 10 RDP returns.  The form 8958 is a direct result of our problems with filing and the IRS is working within the community to determine what both the service centers and the practitioners need to best serve our clients.



#10 norcalea

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Posted 16 February 2013 - 09:52 PM

Joan - is that list serve open to anyone?  I have an especially difficult return to do this year as one of my RDPs lived a portion of the year in an additional state that does not recongize their status.Became RDP's after moving mid year to California.



#11 joanmcq

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Posted 17 February 2013 - 06:38 PM

Yes, tax@lgbtbar.org Open to tax pros as well as attorneys. Very good group for hashing out RDP/SSMC issues.

#12 Lion EA

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Posted 18 February 2013 - 11:02 AM

Thank you for sharing that resource, Joan.  I will keep it for future reference.



#13 mcb39

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Posted 09 March 2013 - 09:22 AM

>>I'm doing RDPS/SSMC returns<<

 

Pub 555 says, "Each of you must complete and attach Form 8958 to your Form 1040 showing how you figured the amount you are reporting on your return. On the appropriate lines of your separate Form 1040, list only your share of the income and deductions on the appropriate lines of your separate tax returns (wages, interest, dividends, etc.). The same reporting rule applies to RDPs and individuals in California and Washington who are married to an individual of the same sex."

 

When numbers aren't where IRS thinks they should be, then IRS has to look around to find them.  Generally, that's not what we want IRS to do.

So, what form am I supposed to use for couple divorced in November 2012 and ordered to split income for eleven months.   Each has to file Single but split income and I am ordered in the decree to prepare the return.  I am assuming that if I use a hand made splitting form, I will have to paper file the returns, which is no big deal; just want to know how to report it to the IRS.  Have not done one of these for MANY years.  Reading the instructons for 8958, they do not fill the bill because they are no longer married for one month in 2012.  This one is wasting so much of my time and gathering info from two hostile taxpayers is no easy feat.  I know there are exceptions to splitting income and not being able to get the info is one of them.  However, when I asked the X-wife if she would consider just filing single with her own income and deductions; she said "Absolutely NOT!  I am not going against the court order."  X-husband needs return done soon for refinancing and he is willing to do anything to get a return prepared that he can take to the bank.



#14 Lion EA

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Posted 09 March 2013 - 10:21 AM

Well, it sounds as if each has motivation now. Because they are not married, not even under state law, I might prepare their returns as Single using their own separate income and deductions, and then -- if not too complex a mix of income and expenses -- would make use of Line 21 to adjust with a label something like Court-ordered Income Split with Name, SSN. In my software, I can include a return note detailing my calculations. Otherwise, a nice Excel worksheet or Form 8958 marked across the top Court-ordered Income Split with Name, SSN, and paper file.

#15 Jack from Ohio

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Posted 09 March 2013 - 11:28 AM

The FEDERAL IRS does not bow to county court orders.  You will find that if you file any other way than per IRS regs, they will receive a notice.

 

First hand experience.

 

The court should have awarded an amount in the splitting of marital assets.  Spouse 1 pays spouse 2 $XXX.  The county judge cannot dictate IRS regulations.



#16 joanmcq

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Posted 09 March 2013 - 03:43 PM

It depends on when the community ended, which depends on state law. In some states, the community does not end until the divorce decree is final. The 8958 can be efiled with Single returns- that's what I'm doing for my RDPs!

#17 mcb39

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Posted 09 March 2013 - 03:46 PM

The FEDERAL IRS does not bow to county court orders.  You will find that if you file any other way than per IRS regs, they will receive a notice.

 

First hand experience.

 

The court should have awarded an amount in the splitting of marital assets.  Spouse 1 pays spouse 2 $XXX.  The county judge cannot dictate IRS regulations.

 

All of that was done.  I do have a complete copy of the decree.  However, he kept the marital home as she left to live with another guy after 21 years of marriage.  He needs the return to refinance so he can pay her a lump sum amount within 120 days.  He is running out of time.  Bank wants copyof the tax return.  Wisconsin is a community property state and the court ordered that the returns be prepared according to the laws of the state.  I know all of that about IRS not bowing to court orders.  However, this is not a simple return.  There are two daughters in college.  The wife received in settlement and sold all of the mutual funds which triggers a complex 8949.  They also owned six rental units.  He received four of them; she received two.  They each get to claim one of the daughters which involves college credits.  They have itemized deductions and business use of the home.  I would have been willing to disregard the court order and file them each single with their own income and deductions.  She said "Absolutely Not".   I really think that I have it handled.  I created a tax return for the bank showing it the way it will be filed and another bogus one showing it the way it would have been had he filed with only his own business and rental income.  Little does she know that she is getting the short end of the stick because now she will be paying 11/12ths of his SE tax.  She is the same woman who wanted me to "cook the books" a few years back to show him with more income.  Of course, we now know that she was prepping herself to leave him.

 

Thanks for your suggestions.  I did the breakdowns on the 8958 just because it was set up correctly.  WAY too complicated to just do an adjustment on line 21.  This will be a nice income return for me but I would rather not have been involved.  I was subpoeaned for the divorce hearing; but did not have to go in the end.  This was a huge challenge but I feel comfortable about it now.  There still may be a little tweaking if I can pry more info out of the wife; but they both owe so not a problem now.



#18 mcb39

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Posted 09 March 2013 - 03:54 PM

It depends on when the community ended, which depends on state law. In some states, the community does not end until the divorce decree is final. The 8958 can be efiled with Single returns- that's what I'm doing for my RDPs!

 

Thanks Joan.  The community ended on November 28th; the date of the decree.  One more month of marriage would have saved a lot of time and money.  I did use the 8958 in the end to figure the separation of income and deductions.  Wisconsin has very direct rules regarding the Marital Property Act.



#19 joanmcq

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Posted 09 March 2013 - 04:27 PM

Community property is a bitch, and something people in separate property states just aren't going to understand! CA is a bit easier in divorce; the community ends when the couple splits and has no intention of reconciling. So the community would likely have ended when she moved out. But I've done enough research to know that for most community states this isn't the case.

#20 Maribeth

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Posted 09 March 2013 - 05:37 PM

Washington State is like California. Community ends when they split, not when the divorce is final. I believe Idaho is the same.




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