unmarried in Texas

[ldreyna]

After reading a lot to study for the RTPT, I have since had this question about a taxpayer's return.

They are unmarried but live together and share the mortgage and property taxes. What % each pays, I dont know yet.
1.Q: Could they file "single." Each filing their own returns.

Q: Since both are named on the mortgage and both are named on the property taxes, could any one of them itemize using the whole amount, or are the mortgage and the prop. taxes share equally (each can only deduct 50%).

Any suggestions would be appreciated. Looked in pub 555, only talkes about married people, not unmarried.

Thanks,

Larry

[taxtrio]

Back to the basics.... If they are "single" (no children)... Then they file as "single"... unless Texas is a common law marriage state... Then they might qualify as common law married. You have to research that issue, I am not in TX.

The qualifcation for deducting real estate taxes and mortgage interest is that you are liable for them and you have paid them. If they pay the mortgage payment out of a joint account then they both are contributing to the payment and both could / should claim their portions. If the mortgage payment is paid out of just one person's account, and all money is provided by that person then that person should claim all of the interest and taxes as they have paid it all.

If joint account, mixed money from both people... could claim 50% each or their portion.

As long as they don't double dip... would be ok.

Just be careful about which name and SS# is on the 1098. If person claiming the mortgage interest deduction is not the name on 1098.. fill out appropriate information on mortgage interest input worksheet (click on the jump to green arrow on the mortgage interest line).

Taxtrio

[cientax]

I'm in Texas and I usually file them as married jointly. In cases such as your where they bought a home together strongly make them common law married. I look at the purchase contract of the house and look for the signature lines where they signed. It usually asks for "Husband" signature then "Wife" or "Spouse" signature. When I was IRS tax auditor, we used these contracts to make MFJ returns when each spouse filed HOH to claim larger EIC. Texas is a common law state and you or they should consult an attorney or maybe you might want to read the Texas Family Code under comon law marriage.

My opinion is they are common law married, but this is only my opinion. Good luck!

[OldJack]

My opinion is they are common law married, but this is only my opinion. Good luck!

My opinion is they are NOT common law married as they are only sharing expenses and maybe property ownership. Proforma paperwork calling for Husband or Spouse signature is irrelevant to anything. I believe, in this case, they can only file as single taxpayers.

[cientax]

Two different opinions. As I mentioned above, Texas is common law and a good place to start is the Texas Family Code or an attorney if it goes to audit.

[OldJack]

A summary from the Texas Family Code:

Declaration of Informal Marriage

If the parties wish to officially establish the existence of a common law marriage for some reason

(e.g., to qualify for Social Security benefits), they can execute and record a sworn "Declaration of

Informal Marriage." [§ 1.92] Execution of the declaration is not a requirement for establishing a

common law marriage, nor is it a means of marrying as an alternative to a ceremonial marriage.

Rather, it is a permissible means of proving a common law marriage. The form contains the same

information as is given in a marriage license application, and a statement that "on or about (date)

we agreed to be married, and after that date we lived together as husband and wife and in this

state we represented to others that we were married. Since the date of marriage to the other

party, I have not been married to any other person."

[ldreyna]

Thanks, everyone

[kcjenkins]

A summary from the Texas Family Code:

Declaration of Informal Marriage

If the parties wish to officially establish the existence of a common law marriage for some reason

(e.g., to qualify for Social Security benefits), they can execute and record a sworn "Declaration of

Informal Marriage." [§ 1.92] Execution of the declaration is not a requirement for establishing a

common law marriage, nor is it a means of marrying as an alternative to a ceremonial marriage.

Rather, it is a permissible means of proving a common law marriage. The form contains the same

information as is given in a marriage license application, and a statement that "on or about (date)

we agreed to be married, and after that date we lived together as husband and wife and in this

state we represented to others that we were married. Since the date of marriage to the other

party, I have not been married to any other person."

So the first question to the clients is "Do you hold yourselves out as married?" BUT keep in mind the excellent point that Ceintax made. There is a tax advantage to a married couple who both work, to file single, so the IRS does look at things like how the paperwork on the mortgage reads. There are different forms used for two unrelated people buying property, versus a married couple buying it. The IRS position is that if they use the married form, that equals "holding yourself out as married".

[jainen]

>>both could / should claim their portions<<

On a different issue, whether married or not they can only deduct interest on TOTAL acquisition mortgage of $1,000,000 plus total equity mortgage of $100,000. That's per residence regardless of the number of separate taxpayers.

[OldJack]

>>So the first question to the clients is "Do you hold yourselves out as married?" <<

@KC

It appears from the original post that this is the first year a young couple has lived together in this property. I don't know the law in TX but in some states common law marriage is not recognized until a couple have lived together and held themselves out as married for several years. I doubt the couple would testify they intended to be a common law marriage when they signed the mortgage papers.

>>The IRS position is that if they use the married form, that equals "holding yourself out as married".<< But they still have to prove it and the IRS might not agree on audit.

[Eli]

Larry, Check out the following link.

Eli

http://www.co.travis.tx.us/dro/common_law.asp