MFJ vs MFS

[jmallard]

Hi Everyone,

Have a couple, married last year. Husband owes about $7000.00 in Student Loans.

In 2009 he made $7200.00 and the wife made $52909.00 (she is a teacher).

My question is if they file - Married Filing Separately, will the IRS keep her refund (which in considerably higher than his) to count towards his Student Loan debt ? I know the IRS will keep any refund he gets and they will keep any refund if they file - Married Filing Jointly.

The wife paid most all of the household bills (she has 88% of their income) and can itemize easily. The Form 1040 states that if one spouse itemizes their deductions, the other spouse must itemize also. How the heck do I split up the itemized deductions ?

Thanks in Advance !

Jerry

[Pacun]

If she files MFS, the IRS will send her a refund. You should calculate the filing both ways (MFJ and MFS). The sooner they paid the student loan, the better anyways.

You split the itemized deductions based on what each paid. If she itemizes, he will start with a 0 standard deduction and build it up using schedule A, but he is not required to use schedule A if he uses his 0 standard deduction.

[Lion EA]

Does the debt precede the marriage? Would injured spouse apply? Is that the right form? You know what I mean. That would allow them to keep the MFJ if it's a tax savings. Has he looked into consolidating his loans at a lower interest rate. Could he at least catch up so no refund is applied to loans. Why doesn't he want to pay them off, by refund or other means, now that they have income and a tenured job?

[jainen]

>>she has 88% of their income<<

Unfortunatly, jmallard, MFS will not work for this California couple. If they need to do this through the tax return, their only hope is the injured spouse procedure, which ignores community property laws. But instead maybe they could set up a payment plan for the student loan to resolve the delinquent status, move the unpaid balance to a credit card, or take other non-tax actions to deal with the debt.

[jmallard]

Thanks for the responses.

Turns out that the taxpayer does not owe as much as he thought on the school loans. The refund amount with them filing MFJ will be more than enough to pay off the loans.

Another fact concerning this couple is that the taxpayer (husband) has only filed taxes lately for 2007 and 2008, as a Single person of course. He did not file taxes at all for an undetermined number of years (I haven't found out yet) before that. For the most part, for those years he was single and only had one job, so no doubt, he would have been due a refund, which would have paid down his school loan debt sooner.

At any rate, my final question is, how far back can I file his taxes. I'm thinking 2006 would be the only year I could file for him. The rule is 3 years - Is this correct ? and, can I e-file for that year ?

Thanks

Jerry

[Don in Upstate NY]

... At any rate, my final question is, how far back can I file his taxes. I'm thinking 2006 would be the only year I could file for him. The rule is 3 years - Is this correct ? and, can I e-file for that year ?

Technically you can file all his back returns, but 2006 is the only one he can still get a refund for.

Back years must be paper filed.

[jmallard]

Technically you can file all his back returns, but 2006 is the only one he can still get a refund for.

Back years must be paper filed.

Don,

Thanks for the info. Didn't know he could fill all his back taxes.

Jerry

[Don in Upstate NY]

Thanks for the info. Didn't know he could fill all his back taxes.

If it's beyond the three year refund statute and he is due a refund, he gets a nice certified letter that explains that he won't be getting any money back. If he owes money and sends in a check, I've heard that the IRS returns the check. Never had this happen to one of my clients, so can't be sure.

Several twelve-step counseling programs recommend filing all back tax returns as part of the "face your past errors" step.

[jmallard]

If it's beyond the three year refund statute and he is due a refund, he gets a nice certified letter that explains that he won't be getting any money back. If he owes money and sends in a check, I've heard that the IRS returns the check. Never had this happen to one of my clients, so can't be sure.

Several twelve-step counseling programs recommend filing all back tax returns as part of the "face your past errors" step.

Don,

Thanks again for more enlightening information.

I've never heard of "twelve-stop counseling programs" or "face your past errors" programs.

For this taxpayer, I don' t know how far back he has any W-2s and for what years.

I thought there was a form that you could request copies of the W-2s that the IRS has on record, but I can't find the form anywhere.

Jerry

[Ron-DFW]

I am not pro like you guys are but is there anyway they can file MFJ and then she can claim injured/innocent spouse?

Ron

[Lion EA]

Use e-Services to get past information reported on your client. There's a limit on how far back it goes.

[grandmabee]

If it's beyond the three year refund statute and he is due a refund, he gets a nice certified letter that explains that he won't be getting any money back. If he owes money and sends in a check, I've heard that the IRS returns the check. Never had this happen to one of my clients, so can't be sure.

Several twelve-step counseling programs recommend filing all back tax returns as part of the "face your past errors" step.

I thought there was no statue of limitation on non filed returns.

I agree there transcripts only go back so far but you are still required to file.

[Lynn EA USTCP in Louisiana]

I thought there was no statue of limitation on non filed returns.

I agree there transcripts only go back so far but you are still required to file.

The 'no statute on non-filed returns' applies to IRS ability to collect. For non-filed returns they can continue to attempt to collect forever. Filing the return brings into play the 10-year collection statute.

However, for 'refund' type returns, the burden then becomes the taxpayer's. The taxpayer has 3 years from the original due date of the return to file in order to still be able to receive the refund. One day past that, and they're out of luck.

Lynn Jacobs, EA, NP

Kenner, LA