Married filing separately, head of household - Spidell

Married filing separately, head of household

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Message Board Married filing separately, head of household

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    • #250198
      Henry Goff
      Participant

      I have a married couple who was (no legal separation agreement) separated in 2019.  The husband moved out in March and the wife has custody of their daughter and provided more than 50% support.  So, the wife gets to use the Head of Household (HH) status rather than Married Filing Separate (MFS).  They live in California, so they are allocating earned income (community property) 50-50.  I am unclear about the allocation percentage and what rules are followed regarding the HH status vs. MFS.  Do some of the MFS rules apply or is she considered unmarried?  Some numbers in case you need them are her W-2 $250K ($270 Medicare wages); his Sch C net $70K; Total taxes deduction before limitation $35K; home mortgage int (paid by her) $14K; one dependent child 18yo.

      Since the husband moved out in March 2019, qualifying her to file HH, does community property income allocation stop then?

      For instance, the tax program I use is:

      • She gets $10,000 taxes deduction, he gets $5,000;
      • They both are paying self-employment tax.  He is paying based on his net Schedule C income; she is paying based on the business income allocated to her.
      • She is still paying the “Additional Medicare Tax” based on the full Medicare wages amount from her W-2; he is paying a small amount for ½ of the investment income;
      • She is getting the $500 child tax credit (even though it is not allowed for MFS);

      In addition, is it okay for her to take the Home mortgage interest deduction when they are splitting income based on community property rules (she paid it all)?

    • #250263
      David Ellis
      Participant

      In California, the marital community ( for purposes of splitting community income and expense) ends  when  the  couple separates with the intent that  the  separation will be permanent.  A formal separation agreement  is not required.  In  the  case  described above, the  couple would spit community income and expense up until the  point  the husband moved out in March.   After that, each spouse would be be  responsible for their own income and  expense.   One  exception would be  any expenses paid out of community property funds ( for example a savings  account that  consisted of funds from community earnings prior to the  separation) would generally be split evenly.   Income  from community property assets would also be split ( for example an investment  account or rental property).  The  wife would take one  half the home mortgage deduction up to the  point  of separation…..and  all of it for the  remainder of the  year if she paid it from her funds  after the  separation, assuming she otherwise qualified.

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