From MFJ to MFS

[Rosario - CSLP]

Hi ProSeries Family,

I have a couple who needs to file separate in order to benefit them for student loan repayment purposes.   I will be filing both of their taxes.

I have completed (not filed) their MFJ and I know that there is a process to split them.  I am a bit nervous and I want to know what I need to make sure to see on each of their tax returns.  They live in CA, a community state.   

If anybody can provide some wisdom on the process and what I should be expecting to see on their numbers for their 1040 and their 540 (CA), I would appreciate it.  If you know of any videos or any material to guide me, please, share.

Thank you!

Rosario

[The-Tax-Lady]

Put MFJ in the forms search bar to bring up the MFJ vs MFS Comparison form, check the box and it will split the 1040. Look in the State forms for the same type of form.

The Federal Comparison worksheet is not always accurate in the credit/payments area so just compare it to the MFJ 1040, for what the actual amount should be. The RRC shows up in the credits sometimes.

Cannot tell you about CA. When you say Student Loan Repayment, the MFS doesn't allow the deduction for Student loan interest so I don't know if that matters in the case of repayment.

[BobKamman]

@The-Tax-Lady What he means is your insane government's rule that people working for less income for governments or nonprofits can have some of their student-loan debt discharged, if they keep their income under certain amounts for ten years.  But "income" means total on a joint return, so the second mistake they made after taking a low-paying job was to get married.  (My insane government, too.)

The third mistake was not doing a prenuptial, or post-nuptial agreement to disregard community-property rules in dividing income.  

[The-Tax-Lady]

OK, thank you for clarifying that issue and adding to my knowledge on the subject.

Insanity definitely rules the day for the US Government and it's policies.

[Rosario - CSLP]

Thank The-Tax-Lady,

MFS helps in decreasing the amount of income and allowing the taxpayer qualify for specific income-driven plans under a lower monthly payments. Yes, the lose the opportunity to deduct the interests. This is more for a case of cash flow and for forgiveness purposes. 

[The-Tax-Lady]

Thanks for that information. You can definitely learn something new every day in this business.