MFS with additional $1400 std ded for spouse

[Randall]

Client is married, living apart.  Spouse only has SS and does not file.  Both are over 65.  It seems he can file MFS and take the standard deduction plus $1400 for himself and another $1400 for spouse.  ATX has let me enter the info and calculates the additional std ded.  But I'm getting a rejection from IRS.  The error code is F1040-395-01  It just says the Total Boxes checked must equal the count of the checkboxes.  The two boxes on the return are checked.  Am I missing something to check in ATX?  Anyone else run into this?

[Pacun]

I don't think you are missing anything, I think you are taking $1,400 for the spouse by checking a box that should not be checked. Logically, why will you benefit from a spouse who lived apart from you all year?

[TexTaxToo]

Quote

You can check the boxes for “Your spouse” if your filing status is married filing separately and your spouse had no income, isn't filing a return, and can't be claimed as a dependent on another person's tax return

I've never done this, so not sure what is required - Did you include the spouse name and SSN on the return?

[DANRVAN]

On 3/21/2023 at 1:09 PM, Randall said:

another $1400 for spouse.  ATX has let me enter the info and calculates the additional std ded.

 

I agree with Pacun. That does not sound right or possible. 

 

So your are saying ATX is showing a standard deduction of 15,750 on line 12?

 

If so, I believe you should uncheck the box to make it 14,350 as that is the amount that should be allowed.

 

 

[Randall]

On 3/22/2023 at 10:51 AM, TexTaxToo said:

I've never done this, so not sure what is required - Did you include the spouse name and SSN on the return?

According to 1040 instructions and Parker general analysis, this appears appropriate.  I couldn't find a reference in Parker to Code or Regs.  Name and SSN of spouse is included.  I checked the box for both being over 65 and ATX calculates the std ded at $15,750.  But the IRS rejection says Total does not equal number of boxes checked.  I have two boxes checked but where would I verify what 'Total' is.  Two should equal two.  I'm not sure if I'm missing something to check in ATX or IRS computers just won't accept this.

[Randall]

I found a Form 5129 Questionnaire regarding the spouse.  I added that to the return.  It would not be included in the efiling.  So I attached it as a pdf.  Still didn't work.  Same IRS rejection code.  I didn't think it would work but gave it a try.  If I don't get a solution for the efiling to go thru, I guess I'll have the client efile with only himself claiming the additional $1400 std ded.  Then maybe paper file an amended return.  We're only talking about $300.  But it's still annoying.

 

[Lee B]

I can see that you are determined to get the extra $1400, but IMO you are tilting at windmills.

[DANRVAN]

3 hours ago, Randall said:

According to 1040 instructions and Parker general analysis, this appears appropriate.  I couldn't find a reference in Parker to Code or Regs. 

 

What is your source for claiming this deduction?

[Randall]

22 minutes ago, DANRVAN said:

 

What is your source for claiming this deduction?

That was my source.

 

[Lee B]

Copied from page 16 2022 Form 1040 instructions:

"Married Filing Separately If your filing status is married filing separately and your spouse itemizes deductions on their return, check the “Spouse itemizes on a separate return or you were a dual-status alien” box. If your filing status is married filing separately and your spouse was born before January 2, 1958, or was blind at the end of 2022, you can check the appropriate box(es) on the line labeled “Age/ Blindness” if your spouse had no income, isn't filing a return, and can't be claimed as a dependent on another person's return."

Randall, I apologize. My only question is what does the phrase, "if your spouse had no income" mean?

[DANRVAN]

per 151(b) 

"if a joint return is not made by the taxpayer and his spouse, and if the spouse, for the calendar year in which the taxable year of the taxpayer begins, has no gross income and is not the dependent of another taxpayer"

 

sec 61

(a)....."gross income means all income from whatever source derived"

 

On 3/21/2023 at 1:09 PM, Randall said:

Spouse only has SS and does not file

 

I believe SS is gross income as defined by section 61(a).

 

So it looks to me like a no go. 

[Randall]

9 hours ago, DANRVAN said:

per 151(b) 

"if a joint return is not made by the taxpayer and his spouse, and if the spouse, for the calendar year in which the taxable year of the taxpayer begins, has no gross income and is not the dependent of another taxpayer"

 

sec 61

(a)....."gross income means all income from whatever source derived"

 

 

I believe SS is gross income as defined by section 61(a).

 

So it looks to me like a no go. 

I was looking at that.  But thinking 'taxable' ss.  Thanks.

[Gail in Virginia]

I think this a fascinating discussion.  Social security is not considered gross income for purposes of the qualifying relative tests if I remember correctly, so I am not sure whether it would count for this purpose or not.  I would have expected that this particular rule was for spouses who lived together rather than those who had been apart for the entire year, unless the reason they were apart was something like a nursing home situation where the spouse could not sign the return because of a lack of competence.  But I don't know.

[jklcpa]

What's also interesting is the "gross income" test in the 1040 instructions under who must file where it says to not include social security here:

Quote

Chart A—For Most People

*If you were born on January 1, 1958, you are considered to be age 65 at the end of 2022. (If yourspouse died in 2022 or if you are preparing a return for someone who died in 2022, see Pub. 501.)

**Gross income means all income you received in the form of money, goods, property, and services that isn't exempt from tax, including any income from sources outside the United States or from the sale of your main home (even if you can exclude part or all of it). Don’t include any social security benefits unless (a) you are married filing a separate return and you lived with your spouse at any time in 2022, or (b) one-half of your social security benefits plus your other gross income and any tax-exempt interest is more than $25,000 ($32,000 if married filing jointly). If (a) or (b) applies, see the instructions for lines 6a and 6b to figure the taxable part of social security benefits you must include in gross income. Gross income includes gains, but not losses, reported on Form 8949 or Schedule D. Gross income from a business means, for example, the amount on Schedule C, line 7, or Schedule F, line 9. But, in figuring gross income, don’t reduce your income by any losses, including any loss on Schedule C, line 7, or Schedule F, line 9.

***If you didn't live with your spouse at the end of 2022 (or on the date your spouse died) and your gross income was at least $5, you must file a return regardless of your age.
-

 

[DANRVAN]

48 minutes ago, jklcpa said:

What's also interesting is the "gross income" test in the 1040 instructions under who must file where it says to not include social security here:

 

 I think that is actually referring to the non -taxable portion of Social Security income.

[DANRVAN]

7 hours ago, Randall said:

I was looking at that.  But thinking 'taxable' ss.  Thanks.

 

Hold on until you read 1.161-1.

 

§ 1.61-1 Gross income.

(a) General definition. Gross income means all income from whatever source derived, unless excluded by law.

 

That seems to say the excluded amount of SS is not included in gross income!!

 

[jklcpa]

47 minutes ago, DANRVAN said:

 

 I think that is actually referring to the non -taxable portion of Social Security income.

True, but it says to not include "ANY IF"....

In the OP's case as presented, the spouse lived apart the entire year, has only SS benes, and we are told that the spouse isn't required to file.  That tells me that 1/2 of spouse's SS benefits does not exceed the $25K threshold, none of the SS benes are taxable, and spouse doesn't have the minimum other income of $5 that requires filing a return.

[DANRVAN]

 

2 hours ago, jklcpa said:

. Don’t include any social security benefits unless (a) you are married filing a separate return and you lived with your spouse at any time in 2022, or (b)

 

Then it goes on to say " If (a) or (b) applies, see the instructions for lines 6a and 6b to figure the taxable part of social security benefits you must include in gross income."

 

From there lines 6a and 6b will determine the amount of SS included in gross income.  I  interpret that to say the non-taxable amount of Social Security is not included in gross income.  

 

That appears to agree with the definition of gross income per § 1.61-1 per my last post.

 

 

 

[BulldogTom]

2 hours ago, Gail in Virginia said:

I think this a fascinating discussion.  

It is like a movie that you have never seen before and you don't know for sure how it will end.   Never, ever thought of this as a possibility.   Going to get some more popcorn and see how this plays out.

Tom
Longview, TX

[Lee B]

Drake has a small subsection titled, "MFS claiming spouse exemption"

Checkbox # 1  -  Spouse not filing return

Checkbox # 2  -  Spouse has no US income

[DANRVAN]

22 minutes ago, BulldogTom said:

It is like a movie that you have never seen before and you don't know for sure how it will end.

 

Yeah a real cliffhanger!

 

I wish somebody who has "read the book" will tell us how it's going to end.

 

 

[jklcpa]

1 hour ago, cbslee said:

Drake has a small subsection titled, "MFS claiming spouse exemption"

Checkbox # 1  -  Spouse not filing return

Checkbox # 2  -  Spouse has no US income

I have an MFS return each year with taxpayers having lived completely apart for years now. The 2022 info isn't in yet, but I went into 2021 using the planner for 2022, checked those 2 boxes, and Drake did allow the higher standard deduction. Planner shows status as MFS and TWO exemptions.  Within the program, the wife's full name, SSN, and DOB are entered. 

Just playing with this planner because the wife of my client does have income so this scenario isn't a possibility for my client, but interesting nonetheless.  I also looked for a link to any tax research, but there isn't one within the Drake program.

[jklcpa]

1 hour ago, DANRVAN said:

 

Then it goes on to say " If (a) or (b) applies, see the instructions for lines 6a and 6b to figure the taxable part of social security benefits you must include in gross income."

From there lines 6a and 6b will determine the amount of SS included in gross income.  I  interpret that to say the non-taxable amount of Social Security is not included in gross income. 

That appears to agree with the definition of gross income per § 1.61-1 per my last post.

 

 

So do you agree that if the spouse is not required to file a return, therefore spouse has no income or not? Or are you thinking the taxable social security benefit may be between $1 and $4?   That would be the only possibility of the spouse living apart all year in OP's case where the spouse has only SS benefits being collected, wouldn't be required to file, and yet still have some "gross income."   

[Randall]

I was able to get the ATX program to add the additional std deduction.  But IRS rejected it.  I tried looking at ATX, checking and unchecking boxes.  I recommended to client to efile 2022 without the additional std decuction.  It was accepted by IRS.  This is my first year for this client.  He self prepared 2021 and paper filed it and following instructions included the higher std deduction amount.  He received a letter from IRS.  I composed a response letter.  He has not heard back from IRS.  I told him we will wait until he receives a response from IRS regarding 2021.  Interesting comments from all.  If anyone does this, let us know if IRS accepts or rejects even if the software allows for it.

[DANRVAN]

1 hour ago, jklcpa said:

So do you agree that if the spouse is not required to file a return, therefore spouse has no income or not? Or are you thinking the taxable social security benefit may be between $1 and $4?   That would be the only possibility of the spouse living apart all year in OP's case where the spouse has only SS benefits being collected, wouldn't be required to file, and yet still have some "gross income."

 

If the spouse living apart had gross income of $5 or more then he or she would need to file.

 

It appears to me that 1.161-1 states that Gross Income does not include non-taxable social security income,

 

So if spouse in OP has non-taxable social security as only source of income, then the extra deduction should be allowed as I see it.