How do I breakdown the tax liability between husband & wife when filing MFJ

[catherine3]

I am doing a return for a newly married couple. They both have W2 income and significant 1099 income and deductions. I know they will want a breakdown of the liability since one party paid in more than the other. What is the easiest way to breakdown the liability between the two. I tried using the What If form and had a hard time getting the columns to reconcile. Isn't there an easier way to do this?

[jeffmcpa2010 · Accepted solution]

(Begin Preaching) First of all if they are doing accounting between them on their refunds/taxes that does not sound like they are a "WE" yet. 

Statistics show that if the keep their money as "Mine" and "Yours" that their marriage ends up with great challenges. (End preaching)

That being said. I do a spreadsheet (often by hand on a 4 column pad, for those that still know what that is) Column 1 Total, 2 his. 3 hers, for all the lines of income and expense and withholding. If there is SE tax that is also allocated to each by their portion.

Tax is allocated by the percentage of net of Income and expense for each and compared with the withholding.

I just find it easier and quicker to do it by hand than try to find another way.

[BobKamman]

@jeffmcpa2010  "Statistics show that if they keep their money as "Mine" and "Yours"  their marriage ends up with great challenges."

To avoid verbosity,

"Statistics show that if they keep their money as "Mine" and "Yours" their marriage ends up"

But the client is always right.  And we're entitled to bill them for two returns, because that's what they're getting.  Well, actually, three -- but the third is a wedding gift.  

[catherine3]

Thank you very much. This is very helpful. I agree with both of you. They did not even ask me for this. However, as a parent of adults from this same generation, I wanted to be prepared. I set up an Excel spreadsheet that I can use for this and other clients if it comes up. Fortunately, I no longer use columnar pad. However, I have had clients that still use it! The good old days! Thanks again for your help.

[BobKamman]

There's a worksheet in ProSeries that does that, something like MFJ Split, but it should really be called a doesn'tworkverywellsheet.  

[Taxprohere]

You can also show them the MFS comparison to show they might stop worrying about who has what, chances are they'd both lose out.  You can also use this worksheet to take a % of each MFS liability to the combined MFS liabilities, and then apply that % to the MFJ tax liability.  May not be exact be seems logical enough for the two clients I have that like to divvy up a MFJ liability.

[catherine3]

I agree with that! I tried using that worksheet. It was very frustrating, and it did not work very well. I created an Excel spreadsheet in a fraction of the time. Sometimes doing things the hard way is really the easy way.