Married taxpayer, filing as unmarried head of household, may use full standard deduction.Two taxpayers are legally married at the end of the tax year. They do not elect to file a joint return. One taxpayer qualifies to file as an unmarried head of household; the other files as married filing separately Married Filing Separately A filing status for married couples who choose to record their respective incomes, exemptions and deductions on separate tax returns. This method is opposite to "married filing jointly" and has few benefits. . Issues If a married taxpayer who files as a head of household itemizes deductions, may the taxpayer's spouse claim the full standard deduction The name given to a fixed amount of money that may be subtracted from the adjusted gross income of a taxpayer who does not itemize certain living expenses for Income Tax purposes. for married taxpayers filing separately? In addition, if the spouse who files as married filing separately elects to itemize To individually state each item or article. Frequently used in tax accounting, an itemized account or claim separately lists amounts that add up to the final sum of the total account on claim. deductions, may the spouse who files as head of household claim the standard deduction for head of household status? Analysis Several provisions of the Code set forth circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or in which an individual who is legally married may not be considered married. The general rule in Sec. 7703(a) provides that an individual legally separated from his spouse under a decree decree, in law, decision of a suit in a court of equity. It is the counterpart in equity of the judgment in a court of law, although in those jurisdictions where law and equity have merged, judgment is sometimes used to include both. of divorce or of separate maintenance would not be considered married. Under Sec. 7703(b), an individual who is married shall not be considered married if (1) an individual maintains as his home a household which constitutes, for more than half of the tax year, the principal place of abode One's home; habitation; place of dwelling; or residence. Ordinarily means "domicile." Living place impermanent in character. The place where a person dwells. Residence of a legal voter. Fixed place of residence for the time being. of a child for which such individual is entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: to a deduction deduction, in logic, form of inference such that the conclusion must be true if the premises are true. For example, if we know that all men have two legs and that John is a man, it is then logical to deduce that John has two legs. for the tax year, (2) such individual furnishes over half of the cost of maintaining such household during the tax year and (3) during the last six months of the tax year, such individual's spouse is not a member of such household. Sec. 63(c)(6)(A) and (g) provide for another situation in which an individual who is married may be considered not married, providing that the marital status marital status, n the legal standing of a person in regard to his or her marriage state. of an individual is also determined under Sec. 7703 when applying the limit as to the eligibility to take the full standard deduction when filing a separate return. The principle of treating a married individual as unmarried in certain situations also applies to the tax tables set forth in Sec. 1. In general, a married individual may file a joint return with his spouse under Sec. 1(a), or file a separate return under Sec. 1(d) and pay the tax imposed on taxable income Under the federal tax law, gross income reduced by adjustments and allowable deductions. It is the income against which tax rates are applied to compute an individual or entity's tax liability. The essence of taxable income is the accrual of some gain, profit, or benefit to a taxpayer. in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with the tables set forth therein. However, a married individual may also have an additional choice of filing status under Sec. 1(b) if he is a head of household (as defined in Sec. 2(b) and (c)). Although Sec. 2(b) specifically refers to an individual who is not married to be considered for head of household status, Sec. 2(c) provides that an individual shall be treated as not married at the close of the tax year if such individual is so treated under the provisions of Sec. 7703(b). Thus, legally married individuals may also use head-of-household filing status, as long as they satisfy the Sec. 2(b) and 7703(b) requirements. If a legally married individual uses the head-of-household filing status, the status of the other spouse continues as a married individual filing separately under Sec. 1(d). Next to be considered is the relationship of one spouse filing as head of household and the other spouse married filing separately with the eligibility of the spouses to use the standard deduction and the right to elect to itemize deductions. Sec. 63(e)(1) provides, in general, that unless an individual makes an election under this subsection subsection Noun any of the smaller parts into which a section may be divided Noun 1. subsection - a section of a section; a part of a part; i.e. for the tax year, no itemized deduction Itemized Deduction A deduction from a taxpayer's taxable adjusted gross income that is made up of deductions for money spent on certain goods and services throughout the year. shall be allowed for the tax year. Sec. 63(b) provides in part that, if an individual does not elect to itemize his deductions, adjusted gross income is instead reduced by the standard deduction. This right of a taxpayer to elect to itemize deductions or use the standard deduction is generally limited by Sec. 63(c)(6)(A), which provides that a married individual filing a separate return in which either spouse itemizes deductions shall have a standard deduction of zero. This limit then applies to married individuals filing separately under Sec. 1(d), but does not apply to a spouse who qualifies for and files as head of household (because the spouse with head-of-household status is not considered a married individual under Sec. 7703(b)). Therefore, a spouse who filed as head of household may use the full standard deduction and is not limited under Sec. 63(c)(6)(A) by the other spouse's election to itemize deductions. Also, if the head-of-household spouse elects to itemize deductions, the general limit of Sec. 63(c)(6)(A) continues to apply to the other spouse, because the other spouse is a married individual filing separately. Page 5 of IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. Publication 501, Exemptions, Standard Deduction, and Filing Information, discusses spouses who elect to file separately and how one spouse may be able to file as head of household if the spouses live apart and meet certain tests. In that discussion, there is also a statement that provides that head-of-household filing status allows a taxpayer to choose the standard deduction, even if the taxpayer's spouse chooses to itemize deductions. Conclusion If a married individual files a separate return with head-of-household status and elects to itemize deductions, and if the other spouse continues to file as married filing separately, that other spouse is not eligible for the full standard deduction. Second, if the other spouse who files separately elects to itemize deductions, the spouse who files a separate return with head-of-household status may still use the full standard deduction available for head-of-household status. IRS LETTER RULING 200030023 (6/27/00) |
|
||||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion