Tax Law (Questions About Taxes)/Amendments

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QUESTION: We filed joint in 2012.  I am on SSDI and received my lump sum check in 2012 that was for arrears in 2011.

I am interested in filing an amendment for 2012 and file separate because it will be the difference between paying taxes on my SSDI or not if I can list that lump sum payment as 2011 income. If I do that, and file separate, my SSDI will be exempt, as it is just under the $25k/year limit for paying SSDI taxes.

However, obviously, if we file separate, we lose deductions for filing joint.  Do you think it will be worth it in savings to file separate and lose deductions?  If so, how difficult is it for us to amend it?

ANSWER: Jim,

Thanks for your question.

The savings don't matter because once you file a joint return, you cannot amend it and file separately.

Just for your information and possible future use, if you file separate returns 85% of your SSDI would be subject to tax. Also, you would not lose the deductions - you can both itemize or both take the standard deduction with separate returns.

Hope this helps.

John Stancil, CPA

---------- FOLLOW-UP ----------

QUESTION: Aren't there deductions specific to joint returns that cannot be claimed filing separate?

Also, I read that if I file separate, and my SSDI does not exceed $25k, I would not pay taxes.  Is that true?  

I guess it shouldn't be too difficult to just run the numbers both ways to see whats a more lucrative return....

Also, quick question on forgiven debt.  I settled some credit card debt in 2012.  The forgiven portion is considered income, but I am insolvent, so I know about the form I can fill out to claim exemption from paying taxes on that.  My question is, should I wait until I get the 1099 for it or just report it anyway regardless of what year, if any, I even get the 1099?  It's not uncommon that the banks fail to send the debtor the 1099 but still report it to the IRS.

Answer
I assumed you were referring to normal itemized deductions.  There are a number of credits that you can't take when filing separate -child and dependent care, earned income, education, credit for elderly and disabled.  

85% of your SSDI would be includable in income, but if your total income was below the threshold for filing, you would not pay tax on it.

You should wait for the 1099. They often wait, but if they file a 1099 and don't give you one they are in violation.

Hope this helps.

John Stancil, CPA

Tax Law (Questions About Taxes)

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John Stancil, CPA

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I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at www.mybaldcpa.com. I also offer seminars and consultations to churches and clergy on their tax issues at www.churchtaxsolutions.com Also visit my blog, www.thetaxdocspot.com. I am listed on Tax Connections at https://www.taxconnections.com/profile/John-Stancil/12258973 Prepare and file your own taxes at www.1040stancilcpa.com

Experience

I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

Organizations
FICPA, NATP, NCPE Fellowship, Lakeland Business Leaders

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The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

Education/Credentials
DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

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