Married separate and Unemployment

[Lynne11]

has any one found any guidance anywhere on using married separate status and the unemployment exclusion?

[BobKamman]

Yes.  Here is the guidance from Forbes.  It says, "consult a tax professional."

https://www.forbes.com/sites/ambergray-fenner/2021/03/14/what-you-need-to-know-now-about-non-taxable...

Here is the guidance from IRS.

https://www.flickr.com/photos/asv/2163705369

As Commissioner Rettig says, "we welcome two returns when we don't have the people to process even one!"

[Drphibes]

Nothing yet, we are going to offer it as a "if you want to take a chance" to our clients.  You can always amend back to joint (and pay).

Found this on the web, interesting nuance

Filing MFS to get around the $150K MAGI cap for the unemployment income exclusion may cause the Medicare premiums to cost more for older individual than is saved on the unemployment income.  So you need to factor that in when making the decision to file MFS.  From the 2021 chart the rates for individuals filing MFS could, depending upon their AGI create a substantial increase in Medicare premiums two years down the line.

Although there are all sorts combinations of income and unemployment lets look at a simple case.  Couple has an AGI of $200,000. They file MFS to get under the $150K limit. Assume they split income and their MFS AGI is $100,000 each. 

MFJ MAGI = $200,000, Medicare Premiums = $207.90 each per month.   $2,494.80 each per year.  $4,989.60 Combined

MFS MAGI - $100,000, Medicare Premiums = $475.20 each per month.   $5,702.40 each per year  $11,404.80 Combined 

Or a net increase of $6,415.20

Definitely something you need to consider for clients who are or will be on Medicare two years from now.