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Married Filing Jointly

Married Filing Jointly is a filing status for married couples that have been married before the end of the tax year. When filing under married filing jointly status, couples can record their incomes, exemptions and deductions on the same tax return, making both spouses equally responsible for the return and the taxes. Below are some of the most commonly asked questions about the Married Filing Jointly tax status answered by the Experts.

How much home mortgage interest deductions can a couple that is filing their taxes as married filing jointly claim on their main home and secondary residence, is the any advantage to filing married filing separately? Also, is there a limit to itemized deductions?

In most cases the total amount that a couple can treat as home acquisition debt at any time on their main home and second home cannot exceed $1 million dollars if filing as married filing jointly, or $500,000 dollars if filing as married filing separately. However, if the individuals are not married they may deduct mortgage interest expenses based on home acquisition debt at any time on their main home and second home up to $1 million dollars. There is also a limit on overall itemized deductions called Pease limitations. These limitations were temporarily released for 2010-2012 but will be back for the year 2013.

If a person’s spouse made less than $4,000 for the year, and they are filing as Married Filing Jointly, would they be required to include the spouses W-2 on their tax return?

Typically the couple would be required to include all taxable income on their tax return, and their employer is also required to provide the Internal Revenue Service (IRS) with all of the information on their W-2.

Would a United States citizen, whose spouse and child have just became legal U.S. residents in July, qualify for the Earned Income Credit (EIC) for the year even though they were not legal residents for the entire year?

Most generally the rules for the EIC state that the individuals cannot qualify for the credit if one or both of them are a nonresident alien for any part of the year, unless they file married filing jointly and treat the spouse as a resident alien for the entire year. In this case the spouse’s worldwide income would need to be reported on the tax return; also this would typically make the couple eligible for the additional child tax credit.

What fees could a couple deduct when refinancing their home? Also would rent received from a cell tower site need to be reported as rental property? If so where on the tax return would it be reported?

Typically a person could amortize the loan origination fee, deducting a pro-rated amount averaged out over each year of the loan. As for the rent for the cell tower site, it would be reported as rental property on Schedule E – along with any related expenses if there were any.

Could a married couple, that lives separately, in different states still claim married filing jointly?

Most generally, for federal purposes, it would not matter where either spouse lives, they can file married filing jointly. However, for state purposes, one of them will need to be a resident of that state and the other a non-resident. Their income will need to be allocated to the state of residence for tax purposes.

Using the Married Filing Jointly tax status is best if only one spouse has a significant income, however, if both spouses work and the income and deductions are large and unequal, it may be more advantageous to file separately. When a couple files as married filing jointly if either one of the spouses understates the tax due, both are equally liable for the penalties unless the other spouse claims that they were not aware of the mistake and did not benefit from it. The questions raised here can be technical and tricky, however, when this happens, who better to get insight on these matters from than the Experts.
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