unemployment and filing separate

[jclark11]

So I have ran a few returns and in some of the cases it is obvious to now file separate due to the cap on unemployment at 150K adjust gross. So do you think IRS will consider that when they say they are handling the returns that are previously filed as joint. UGH just another thing on our plates to amend these on our own? Are you going to do that or hope IRS gets it right.

[sjrcpa]

IRS will not change a joint return to MFS for this.

You'll need to do it by May 17.

[abctax55]

AND... I believe it should be a 'superseding' return rather than an amended return.

The general rule is that one isn't allowed to change from MFJ to MFS.

[dmccpa]

I think this is a ridiculous stance taken by the government once again.  If single is $150k cap then MFJ should be $300K cap.  Regardless, is it even worth it to file single because of the change it tax rates?

[BobKamman]

Have we seen anything official about the May 17 date yet? Is it an extension, or just a statement that “we won’t assess interest or penalty if filed by that date”? I’m sticking with April 15 for amended filing status.

Here’s something interesting from the Internal Revenue Manual:

“If the taxpayer has not allocated a previously received refund, return the claim to the taxpayer and request the allocation. The IRS cannot make the allocation determination of a previously received refund. See the Exception in paragraph 2 of IRM 21.6.1.5.8, Allocating Married Filing Joint Cases, for more information.”

That exception only applies “If the married filing joint return did not result in a previously issued refund and the Service can conclusively determine ownership of all income and payments claimed/allowed on the married filing joint return using internal information, the employee must prepare the allocation instead of rejecting the claim.”

[jclark11]

But we can go mfj to mfs if before deadline

[jclark11]

I have determined that as long as you have similar incomes with husband and wife. Then excluding the unemployment on a mfs return benefits them. 

[abctax55]

@jclark11  -  You should review this thread:

https://proconnect.intuit.com/community/lacerte-tax-discussions/discussion/how-do-i-get-lacerte-to-e...

[rbynaker]

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@BobKamman wrote:

Have we seen anything official about the May 17 date yet?

---

Not yet.  I am also skeptical.  The emergency powers allow the IRS to extend "acts".  Last year they started with just a few "acts" but then they ended up with everything on the menu.  I haven't seen a menu yet for this year but I hear the soup du jour is "1040".  No 1120, no 1040-ES.  I had a client yesterday who needs a corrective retirement plan distribution for 2020, I told her to get it done by 4/15 just in case.

[BobKamman]

@jclark11 "I have determined that as long as you have similar incomes with husband and wife."

And that's easy to reach in community property states.

It helps not to have some of those pesky credits not allowed to MFS filers. I'm working on a return with $18K unemployment paid to one spouse, included in joint income of $200K but only $100K for each MFS.  I don't know who's arguing about whether unemployment is community income, but I don't think they have read years of IRS guidance.  Excluding $9K on each return results in a savings of more than $4,000.  I think I'll throw in $300 charitable for each, since IRS may have to admit its error on that one before they get around to processing these returns.