Why Allow Joint Tax Returns?

[jwoodie]

The ONLY legitimate rationale is to allow a caregiver to forgo additional income in order to provide additional care and supervision of children. Should the law should be changed to allow joint tax filing only when claiming dependent children?

 

[boedicca]

Great idea. Let's force working people to file even more tax forms and waste more time!

 

[Katzndogz]

No. Allowing joint tax returns raises the taxable income for the purpose of tax increase structure. An individual making $150,000 a year is taxed at a different rate than an individual making $200,000 a year. A married couple where one makes $150,000 and one making $50,000 a year will each pay taxes at a lower rate than one person making $250,000 a year. Join them and tax the whole at the higher rate. It's called the marriage penalty.

The mechanism to avoid the marriage penalty is to file Married Filing Separately. But most people don't realize that the finances actually have to be kept separate, this includes separate bank accounts, separate checks to pay the household bills. Separate contributions for major purchases. Failure to keep adequate records could subject a married couple to income tax evasion and perjury charges as they might have filed taxes separately, but the money was always commingled.

Do you understand now?

 

[Katzndogz]

Joint tax filing for individuals where one is a dependent of someone else and doesn't earn any money is not limited to married couples but any dependency. Children, elderly parents, a disabled family member, wholly dependent on another files "jointly" with the wage earner with the dependent as a tax deduction for the non working joint filer. Their social security numbers appear on the tax returns also.

 

[oldfart]

No. Allowing joint tax returns raises the taxable income for the purpose of tax increase structure. An individual making $150,000 a year is taxed at a different rate than an individual making $200,000 a year. A married couple where one makes $150,000 and one making $50,000 a year will each pay taxes at a lower rate than one person making $250,000 a year. Join them and tax the whole at the higher rate. It's called the marriage penalty.

The Tax Act passed in January made the marriage penalty relief provisions permanent for all taxpayers with incomes under $250,000. In practice this means that most married couples with incomes under that amount pay the same whether they file jointly or separately. Standard professional grade software automatically calculates the difference and in 95%+ of the returns in our practice the difference is under $25.

The only significant tax avoidance reason for filing separately is when one spouse has a smaller amount of income (and therefore is in a lower bracket), and major deductions limited by a percentage of AGI (medical expenses, casualty losses, and certain miscellaneous itemized deductions, primarily business and investment expenses).

But most people don't realize that the finances actually have to be kept separate, this includes separate bank accounts, separate checks to pay the household bills. Separate contributions for major purchases. Failure to keep adequate records could subject a married couple to income tax evasion and perjury charges as they might have filed taxes separately, but the money was always commingled.

I think you are over the top here. Businesses (including Schedule C's are required to maintain sufficient books and records to substantiate their income and expenses. Individuals must maintain sufficient records to document any deduction, loss, credit, or other tax-favored treatment they claim. There is no overall requirement to keep any other records. The normal consequence of not keeping records is to allow the IRS to use "indirect" methods of reconstructing income and to disallow favored tax benefits.
Conmingling monies makes proof harder, but there is no requirement that business finances be kept separate from personal, nor that taxpayers filing jointly maintain separate records.

Perjury and presenting the IRS with alter or forged documents is certainly a no-no. But failure to keep adequate records, no matter how egregious, will only subject a taxpayer to a Code Section 6662 (a) or (b) penalty (20% or 40% of the understated tax). Tax crimes bearing the possibility of jail time require overt acts and a high standard of proof.

There are two relief provisions that generate a lot of business for us. "Injured spouse relief" allows a taxpayer on a joint return to receive a refund based on a "shadow return" of what items of income, deductions, and witholdings are attributable to them when their spouse is subject to a refund intercept program. "Innocent spouse relief" mitigates the joint liability principle when it would be inequitable to hold the spouse responsible on a joint return for erroneous items of the other spouse.

Questions?

 

[Katzndogz]

You point out that there is no requirement that individual or joint filers keep records, just consequences for failure to do so.

 

[editec]

The ONLY legitimate rationale is to allow a caregiver to forgo additional income in order to provide additional care and supervision of children. Should the law should be changed to allow joint tax filing only when claiming dependent children?

I believe that I could make a very credible argument for why joint tax returns are inherently unfair in the first place.

I suppose I could also make a fairly good argument for why we should have them despite their OBVIOUS unfairness to those who are not married.

 

[Katzndogz]

Conservatives have been trying to get tax reform to eliminate joint filing tax penalties forever, are liberals now getting on board - because there might be some benefit to same sex marriage?

 

[WorldWatcher]

Conservatives have been trying to get tax reform to eliminate joint filing tax penalties forever, are liberals now getting on board - because there might be some benefit to same sex marriage?

I'm familiar with Republican's trying to fix the "marriage penalty" where Civilly Married couples filing joint tax returns paid more in taxes then if they filed as individuals.


But could you provide some evidence that we've been trying to eliminate joint tax filings (a) either "at all" or (b) "forever?


Thank you in advance.



>>>>

 

[WorldWatcher]

Individuals must maintain sufficient records to document any deduction, loss, credit, or other tax-favored treatment they claim. There is no overall requirement to keep any other records.

You point out that there is no requirement that individual or joint filers keep records, just consequences for failure to do so.

That's not what he said, he didn't say no records must be maintained. Quite the opposite, he pointed out that records must be maintained for those things you claim on your taxes.


>>>>

 

[Katzndogz]

Conservatives have been trying to get tax reform to eliminate joint filing tax penalties forever, are liberals now getting on board - because there might be some benefit to same sex marriage?

I'm familiar with Republican's trying to fix the "marriage penalty" where Civilly Married couples filing joint tax returns paid more in taxes then if they filed as individuals.


But could you provide some evidence that we've been trying to eliminate joint tax filings (a) either "at all" or (b) "forever?


Thank you in advance.



>>>>

Certainly
Time To Eliminate Joint Filing ? - Forbes

 

[WorldWatcher]

Conservatives have been trying to get tax reform to eliminate joint filing tax penalties forever, are liberals now getting on board - because there might be some benefit to same sex marriage?

I'm familiar with Republican's trying to fix the "marriage penalty" where Civilly Married couples filing joint tax returns paid more in taxes then if they filed as individuals.


But could you provide some evidence that we've been trying to eliminate joint tax filings (a) either "at all" or (b) "forever?


Thank you in advance.



>>>>

Certainly
Time To Eliminate Joint Filing ? - Forbes

Oh, I misunderstood, I thought you were talking about serious efforts. You know like politicians running on platforms and submitting legislation.

My bad.


>>>>

 

[Politico]

Married should get joint. The rest should not.

 

[WorldWatcher]

Married should get joint. The rest should not.

I believe married people are the only ones that can file "joint" returns (at the federal level).


In some situations an individual can file an individual return (or joint return if Civilly Married) and claim another relative as a dependent, but that is not a "joint" return.



>>>>

 

[Skull Pilot]

The ONLY legitimate rationale is to allow a caregiver to forgo additional income in order to provide additional care and supervision of children. Should the law should be changed to allow joint tax filing only when claiming dependent children?

Personally I think there should be no deductions for children and everyone should file an income tax return singly.

Lower the tax rate for everyone and get rid of all deductions and tax credits.

Keep It Simple Stupid.

 

[OnePercenter]

The ONLY legitimate rationale is to allow a caregiver to forgo additional income in order to provide additional care and supervision of children. Should the law should be changed to allow joint tax filing only when claiming dependent children?

Personally I think there should be no deductions for children and everyone should file an income tax return singly.

Lower the tax rate for everyone and get rid of all deductions and tax credits.

Keep It Simple Stupid.

Let me guess......Because you don't qualify?

 

[oldfart]

Married should get joint. The rest should not.

I believe married people are the only ones that can file "joint" returns (at the federal level).


In some situations an individual can file an individual return (or joint return if Civilly Married) and claim another relative as a dependent, but that is not a "joint" return.

A taxpayer may chose to file a married separate return and is allowed to claim the spouse as a dependent if the spouse had no income and the taxpayer provided all of the spouse's support. This generally is not a very good deal, as the exemptions work out the same but the standard deduction is double on the joint return. All the other drawbacks of a married separate return (base amount for computing taxable Social Security is zero compared to $32,000; lower limits on retirement contributions, ineligibility for EITC, narrowere tax brackets, etc.) also attach. But you would avoid joint liability.

 

[Skull Pilot]

The ONLY legitimate rationale is to allow a caregiver to forgo additional income in order to provide additional care and supervision of children. Should the law should be changed to allow joint tax filing only when claiming dependent children?

Personally I think there should be no deductions for children and everyone should file an income tax return singly.

Lower the tax rate for everyone and get rid of all deductions and tax credits.

Keep It Simple Stupid.

Let me guess......Because you don't qualify?

Qualify for what?

This might be hard for you to understand but I don't believe I should force other people to pay for my lifestyle choices.

I own a home and am planning to build a second and I have no problem with getting rid of the mortgage deduction. I don't believe people should be forced to pay more in taxes simply because they don't own a home.

If you have kids you most likely use more government services than people without kids why should other people be forced to pay higher taxes simply because they don't have kids?

Lower the rate, get rid of all the deductions exceptions and exemptions as well as all the bullshit tax credits for buying cars etc.

Reduce the complexity of the tax code, reduce the size of the IRS and save the taxpayers some money.

 

[OnePercenter]

Personally I think there should be no deductions for children and everyone should file an income tax return singly.

Lower the tax rate for everyone and get rid of all deductions and tax credits.

Keep It Simple Stupid.

Let me guess......Because you don't qualify?

Qualify for what?

This might be hard for you to understand but I don't believe I should force other people to pay for my lifestyle choices.

I own a home and am planning to build a second and I have no problem with getting rid of the mortgage deduction. I don't believe people should be forced to pay more in taxes simply because they don't own a home.

If you have kids you most likely use more government services than people without kids why should other people be forced to pay higher taxes simply because they don't have kids?

Lower the rate, get rid of all the deductions exceptions and exemptions as well as all the bullshit tax credits for buying cars etc.

Reduce the complexity of the tax code, reduce the size of the IRS and save the taxpayers some money.

That's really big of you since mortgage interest is at record lows.

Since they don't make enough to itemize, some (if not most) homeowners don't qualify for the mortgage tax deduction.

I haven't visited a National Park in decades, but I'm not so self-centered to not want part of my taxes so others may enjoy.

 

[Polk]

No. Allowing joint tax returns raises the taxable income for the purpose of tax increase structure. An individual making $150,000 a year is taxed at a different rate than an individual making $200,000 a year. A married couple where one makes $150,000 and one making $50,000 a year will each pay taxes at a lower rate than one person making $250,000 a year. Join them and tax the whole at the higher rate. It's called the marriage penalty.

The mechanism to avoid the marriage penalty is to file Married Filing Separately. But most people don't realize that the finances actually have to be kept separate, this includes separate bank accounts, separate checks to pay the household bills. Separate contributions for major purchases. Failure to keep adequate records could subject a married couple to income tax evasion and perjury charges as they might have filed taxes separately, but the money was always commingled.

Do you understand now?

Actually, married couples where one earner has a higher income and one has a lower income pay a lower tax rate than they would individually. It's where you have two earners making similar amounts that the current code results in higher taxes.