I Need Some Tax Advice

[MTG#10]

Ive been doing my taxes with Turbo Tax for the last 4 years with no problems at all. We always file "married filing jointly" and claim our 3 children. We make too much to qualify for the EIC so that is a non-issue.

My wife came home from work today, and told me that three different ladies at her work claim they get more back by filing "married filing separate" (not separated).

So I run both scenarios through turbo Tax, and sure enough we would get back a little over $400 more federal, and $300 more state.

The way I did it though, was I claimed 2 of the 3 kids, all of the deductions (mortgage interest, property tax, etc.) and had my wife claim the 3rd child with no other deductions. Again, we dont qualify for the EIC, Im just using the kids for dependent deductions.

Is it legal to do it this way, or does one of us HAVE to claim all 3 kids?

If it matters, I make more than her.

[Buck]

FWIW, My parents are divorced, and they alternated 2 Kids / 1 Kid every year.

Not sure if that matters in this situation.

[The Franchise]

I wouldn't think it's illegal to do it.....if they give you the option.

[BigVE]

From what I know of Turbotax (I've used it for years) I don't think they would even allow you to enter your info in a scenario that you didn't qualify for or was "illegal" per se.

[MTG#10]

Originally Posted by BigVE

From what I know of Turbotax (I've used it for years) I don't think they would even allow you to enter your info in a scenario that you didn't qualify for or was "illegal" per se.

When you file "married filing separate" you have to file two different returns, one for you and one for your spouse. The program creates two different files that arent linked in any way, so there's no way the program would notice that to tell you if its legal or not.

[BigVE]

Originally Posted by MTG#10

When you file "married filing separate" you have to file two different returns, one for you and one for your spouse. The program creates two different files that arent linked in any way, so there's no way the program would notice that to tell you if its legal or not.

Really? Hmmm. I have always been told that it's better to file jointly so that's all I've ever done/tried.

[BigVE]

I know one thing....trying to nab a few extra bucks is NOT worth setting yourself up for an IRS audit.

[Scorp]

I have always gotten more back filing jointly.

[PastorMikH]

Originally Posted by BigVE

I know one thing....trying to nab a few extra bucks is NOT worth setting yourself up for an IRS audit.

Agreed.

I can assure you it is no fun going around and around with them. In the 5 years I've been at this church, they have nailed our church's employment taxes for every tax year but one from 1996-2006. In each and every case I have finally proven we were right, our figures were right, and was able to get penalties and interest removed. Well, we are still working on '06 - spent 3 hours in the office today dealing with phone time, journal entries, and getting copies of the same paperwork we have already faxed, mailed, and sent certified mail 10-12 times now, ready to re-send them.

I am to the point that I think people going to work for the IRS have got to be issued an IQ test and if they score higher than IDIOT, they are rejected for hire.



That said, I've used Turbo Tax every year since 1997 and if Turbo Tax will let you do it without manually over-riding their figures and no audit alerts appear, you should be fine.

[Coach]

It's perfectly legal.

Normally, it does not create that much of a tax effect. Make sure you both filld "Married, but file seperately" and if one spouse itemizes, the other spouse also have to do this as well.

[BigMeatballDave]

Originally Posted by BigVE

I know one thing....trying to nab a few extra bucks is NOT worth setting yourself up for an IRS audit.

Heh. This is small time. Its not worth their time to investigate over a few hundred dollars.

[Rain Man]

I think married filing jointly works best if one spouse has a very low income, and married filing separately works best if the incomes are high and similar. However, I thought there was some limitation about when you can do the separate thing. And it seems like picking the number of kids in each return shouldn't be right. But what do I know, I'm not an accountant.

[Rain Man]

Google this - married filing jointly vs. separately - and the first two articles are pretty good.

[MTG#10]

Originally Posted by Coach

It's perfectly legal.

Normally, it does not create that much of a tax effect. Make sure you both filld "Married, but file seperately" and if one spouse itemizes, the other spouse also have to do this as well.

Thanks for this info, this is what the problem was. I was itemizing, and having my wife take the standard deduction - that's illegal. Once I changed her's to itemized she actually owed, and the difference made it better off for us to file jointly after all.

Me thinks the people at my wife's work are committing some sort of fraud if they're getting back a lot more by filing separately.

[Coach]

Originally Posted by MTG#10

Thanks for this info, this is what the problem was. I was itemizing, and having my wife take the standard deduction - that's illegal. Once I changed her's to itemized she actually owed, and the difference made it better off for us to file jointly after all.

Me thinks the people at my wife's work are committing some sort of fraud if they're getting back a lot more by filing separately.

That could be the possibility. Just to save yourself the trouble, just do what you can do without getting your ass audited by the IRS is all I really can say about.