Married Filing Separately due to major income gap

[Foxy-Lady]

Originally filed tax return where there was a refund. I was then told after the fact and I had asked prior to filing, there was a 1099R for $52,000 from a 401K. Purpose to purchase first-time home. This gave a total taxable income of $ 182,000  with additional tax due $15,900.  Due to the $150K threshold they lost $3400 in child credits.  

If file separately:

Person A's total income is $142,000  $52,000 came from 401K for the purpose of first time homebuyer.  Person A  The tax liability is $16,836. This child in question, belongs to Person B

Person B total income is $47,504 from Social Security.  The tax liability is $763. However, since he did not have the child last year, I believe he would be allowed the $1400 stimulus and the $3000 child credit giving him a refund of $3,637. 

By filing separately the actual tax liability would be $13,199 or saving $2700.  Is this correct?

[taxshack · Accepted solution]

It is very possible that MFS is the best outcome for them and it sounds like you've run all the numbers.  Here are my only concerns:

1. Are you in a community property state?  If so, they have to claim the income under community property rules.  Otherwise, you are fine.

2.  If an original return was filed as MFJ, then you need to get the superseding returns done and filed before 4/18 or they won't be able to file MFS.

Good luck!