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Tax.appeal.168, Tax Accountant
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Experience:  3+ decades of varied tax industry exp. Tax Biz owner
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We have been married for over 36 years and have files a joint

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We have been married for over 36 years and have files a joint return each year. Everything is in a joint account or trust. If we fall off the 'fiscal cliff' and have the marriage penality back, how do we switch over to individual tax returns? Looks like the only way to really do it is to get divorced. We live in California and also have a 'not for profit' rental for our son who is paying the mortgage impound payment to us and we pay the mortgage company. We are both retired, but she continues to work and makes 65% of the income. We do not need to work anymore, she just has to in order to feel good about herself. We currently live on my income and bank most of hers, except for couple months of the year when we pay for insurances and taxes. We are just above the $200,000 joint income level. We are preparing to pay off the mortgage on our primary residence next year as it will be below $30,000.
Welcome, THANK YOU for using Just Answer. My goal is to help make your life...a little...LESS taxing.

In brief, as long as you are married, you have to file either married filing jointly, or married filing separately. Also, California is a community property state, which makes the tax filing rules a little different than in other states. As California is a community property state, even if you were to file married filing separately, you both will still need to report 1/2 of the marital property on each return. Even though you have been filing MFJ in the past, you can switch over to filing MFS (married filing separately) for the next tax year, however it is usually in the best interest of couples to file MFJ. Just because you started filing MFJ does not mean that it has to be that way every year. You can refer to the IRS Pub 555 for more detailed information regarding taxes and community property states.

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