Tax Law (Questions About Taxes)/Joint vs. Separate

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Question
When is it beneficial for a married couple to file separately? Usually we file jointly, claim ourselves and 1 child, and we itemize, due to amount of medical bills. This yr is entirely different. My wife's income is approx $45K. My income is $66K from my mother's life insurance and $40K IRA I cashed that I inherited from my mother.I have no employment income. There will also be $48K profit from sale of her home (basis & sale price were $80K). We gave quite a few items to charity (books, clothes, few pieces of furniture), but I realize I can't claim charitable deductions if I can't itemize. I appreciate your thoughts on the subject.

Answer
Ed,

Thanks for your question.

Usually, you have to calculate the taxes both ways to see if there is any advantage to filing a separate return. When one spouse has significantly higher income than the other if sometimes is to their advantage to file separate. most of the time, however, it is less costly to file jointly.

I would point out to you a couple of things, however. Life insurance proceeds paid by reason of death are not normally taxable. If the basis and the sale price on the home were both $80K you don't have any tax liability there. The basis of the home if you inherited it is the fair market value as of date of death.

Frankly, it sounds as if you may be in over your head on this. I would recommend getting a qualified CPA or Enrolled agent to prepare your return.

Hope this helps.

John Stancil, CPA

Tax Law (Questions About Taxes)

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John Stancil, CPA

Expertise

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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