When you and your spouse file separate returns, the splitting of itemized deductions follows specific rules to ensure that each spouse only claims deductions they are entitled to. Here is a comprehensive explanation of how to split itemized deductions:
- Individual Reporting: Each spouse must report their own income, deductions, and credits on their individual return. This means you cannot combine or share deductions that are not jointly incurred.
- Mandatory Itemization: If one spouse itemizes deductions, the other spouse must also itemize. The standard deduction amount for the non-itemizing spouse is zero if the other spouse itemizes.
- Expenses Paid Separately: If an expense is paid from separate funds, only the spouse who paid the expense can claim the deduction. For example, if one spouse pays for medical expenses from their own account, only that spouse can deduct those expenses.
- Jointly Paid Expenses: For expenses paid from joint funds, such as a joint checking account, the deduction is generally split between the spouses. For instance, if mortgage interest is paid from a joint account, each spouse can deduct half of the mortgage interest on their separate returns.
- Ownership of Property: The ownership of the property related to the expense also affects the deduction. For example:
- Mortgage Interest: If the mortgage interest is paid on a qualified home held as tenants by the entirety, each spouse can deduct the mortgage interest they alone paid.
- Real Estate Taxes: If the property is held as tenants in common, each spouse can deduct half of the total real estate taxes paid. If held as tenants by the entirety or in joint tenancy, each spouse can deduct all of the real estate taxes.
- Documentation: Each spouse must maintain records documenting who paid the expense to substantiate their deductions.
- Special Rules for Community Property States: In community property states, income and expenses are generally considered to be owned equally by both spouses. Therefore, deductions for expenses paid from community property funds are typically split equally.
By following these guidelines, you and your spouse can accurately split your itemized deductions when filing separate returns.
Sources:
Publication 501 (2023)
§ 66. Treatment of community income
§ 63. Taxable income defined
Publication 17 (2023)
Publication 504 (2023)
Publication 3920 (9/2014)
