|
When
can you legally file as a single taxpayer, if married:
Here is a summary
of the relevant rules:
If the following
tests are met, you can file as "single" even though you're married
(i.e., you will not have to use the "married filing separately"
filing status that is discussed below):
(1)
You maintain as your home a household which for more than half
the year is the principal living place of a child of yours whom
you can claim as your dependent (or could have claimed as your
dependent except that you signed away your right to the exemption
to the child's other parent).
(2)
Your furnish more than half of the cost of maintaining the home.
This includes all house-related costs, plus the cost of food consumed
in the home.
(3)
Your spouse cannot have been a member of the household for
the last six months of the year. Note that if both you and
your spouse meet these tests (e.g., you have more than one child
and each has custody of a child), both of you can qualify to file
singly. If only one meets the tests, then the other, nonqualifying,
spouse will have to file as married filing separately.
A married
taxpayer can always use the filing status "married filing separately."
However, it is less favorable than the "single" filing status.
In many cases
a couple is "separated" but with no decree of divorce or separate
maintenance. In that case, they are still considered to be married
in the eyes of state law. And the tax law follows state law on
this matter. The couple can still file "jointly," but this may
be impractical in some cases depending on the nature of the separation.
Tax aspects of taking on the care of an elderly or incapacitated
individual.
1. Dependency
exemption. You may be able to claim the cared-for individual
as your dependent, thus qualifying for an exemption. To qualify,
(a) you must provide more than 50% of the individual's support
costs, (b) he must either live with you or be related, (c) he
must not have gross income in excess of the exemption amount ($2,700
in 1998, adjusted annually), (d) he must not himself file a joint
return for the year, and (e) he must be a U.S. citizen or a resident
of the U.S., Canada, or Mexico. If the support test ((a), above)
can only be met by a group (several children, for example, combining
to support a parent), a "multiple support" form can be filed to
grant one of the group the exemption, subject to certain conditions.
2. Medical
expenses. If the individual qualifies as your dependent, you
can include any medical expenses you incur for him along with
your own when determining your medical deduction. If he doesn't
qualify as your dependent only because of the gross income or
joint return test ((c) and (d), above), you can still include
these medical costs with your own. The costs of qualified long-term
care services required by a chronically ill individual and eligible
long-term care insurance premiums are included in the definition
of deductible medical expenses. There's an annual cap on the amount
of premiums that can be deducted. The cap is based on age, going
as high as $2,570 (in 1998) for an individual over 70.
3. Filing
status. If you aren't married, you may qualify for "head of
household" status by virtue of the individual you're caring for.
If the person you're caring for (a) lives in your household, (b)
you cover more than half the household costs, (c) he qualifies
as your dependent, and (d) he is a relative, you can claim head
of household filing status. If the person you're caring for is
your parent, he need not live with you, as long as you provide
more than half of his household costs and he qualifies as your
dependent.
4. Dependent
care credit. If the cared-for individual qualifies as your
dependent, lives with you, and physically or mentally cannot take
care of himself, you may qualify for the dependent care credit
for costs you incur for his care to enable you and your spouse
to go to work.
5. Exclusion
for payments under life insurance contracts. Any lifetime
payments received under a life insurance contract on the life
of a person who is either terminally or chronically ill are excluded
from gross income. A similar exclusion applies to the sale or
assignment of a life insurance contract to a person who regularly
buys or takes assignments of such contracts and meets other qualifying
standards.
Be sure to
consult with a tax advisor for proper planning and implementation
of tax savings ideas to be sure they are right for you.
C.
David Pitzer, CPA, PC
118
Two Mile Pike
Goodlettsville, TN 37072
(615) 851-2727
Fax: (615) 851-8711
Site
Design Provided By:
|
