Discussion:State tax deduction for divorce wife

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Discussion Forum Index --> Tax Questions --> State tax deduction for divorce wife


TaxPerson (talk|edits) said:

6 January 2007
Husband and wife filed joint return in 2005 and had to pay state taxes. Wife did not have any income that year so all the taxes paid were attributable to husband's income. They were separated in 2006 and both are going to file HOH with children for 2006. Can the wife claim a portion of the state taxes paid on their 2005 return? Thanks for your advice.

1040man (talk|edits) said:

6 January 2007
TaxPerson says: "Can the wife claim a portion of the state taxes paid on their 2005 return on her 2006 tax return?" Question: Where on the Federal or State tax return is there a space for state taxes paid in a previous year as a deduction?

TaxPerson (talk|edits) said:

6 January 2007
I am sorry, I did not make it clear. They filed 2005 taxes and paid the state taxes due in 2006. Now it is time for wife to file her own 2006 return and she wants to know if she can claim a portion of that state taxes paid on her 2006 Schedule A. Thanks for your quick response.

Michaelstar (talk|edits) said:

6 January 2007
Actually your question was okay - I would have gathered that the 2005 taxes due with the return would have been paid in 2006 when the t/r was filed. Were the taxes paid from community property funds? If so then the deduction would be 50/50. If they were not then the person making the payment would be able to deduct the taxes paid even though if was a joint liability. Much like mortgage interest and real estate taxes - the t/p who made the actual payment receives the deduction even though both may be liable for the payment.

Www.cpa1.biz (talk|edits) said:

6 January 2007
What if the payment was made from a joint account Michael. IS that what you are implying to with a community property fund.

thanks,

Bj

Deback (talk|edits) said:

January 6, 2007
He was referring to community property states, not joint bank accounts.


TaxPerson (talk|edits) said:

6 January 2007
They are in Oregon, a non-community state. I am not sure whether they paid the taxes from the joint account or not.

Deback (talk|edits) said:

January 6, 2007
The answer is on page 141 of Publication 17 under Separate Federal Returns. The husband can deduct the entire amount of state tax he paid, and the wife gets no deduction for state tax.

Michaelstar (talk|edits) said:

6 January 2007
TaxPerson - I believe that you will need to determine if the liability was paid from the joint account before they separated (as I doubt they would have a joint account after separation) or a separate account and by whom. If you decide to go 50/50 and one of them not only paid the taxes but also claims 100% of the deduction, there would be an issue upon audit and if questioned.

Will (talk|edits) said:

6 January 2007
I don't see how the wife would be able to deduct half if the tax wasn't assessed against her income. Not in Oregon anyway. Is it the joint return that is creating possibility for deduction? It would seem unusual that just paying the tax would create a deduction. Most other taxes require the TP deducting to have been liable.


William Price, EA | Portland, OR - Talk to me

TaxPerson (talk|edits) said:

6 January 2007
The joint return was not done to create more deduction. They were married and filed the joint return in 05, but in 06 they were separated and will file separately (both HOH due to kids) and claim their respective income and deductions. The question was whether wife can deduct a portion of the state taxes paid for their 05 return which was filed jointly. I looked at Pub 17, page 141 as Deback directed, my conclusion is wife can not claim the deduction. Pub 17 says "You can deduct only the amount of the total taxes that is proportionate to your gross income compared to the combined gross income of you and your spouse". Thank you all for your comments and feedback.

Will (talk|edits) said:

6 January 2007
I understood the premise of your situation TP. The poorly worded question in my post from last night was directed towards Michaelstar and DZ who both said a 50/50 deduction in TY2006 would be allowable to the wife. I was wondering if the joint return from 2005 was what was making the 50% deduction possible for the wife in 2006. Nonetheless, I think you have found the right answer.

Will

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