Because of my dementia, and the possibility of me not being able to manage my own funds, my monthly disability check comes to Dondra and goes into her account for me. Does that then mean we have to file jointly?
Thanks
Q
I checked with my Bro, the answer is No. Are you married to her?
Assuming you & Dondra aren’t married, no. Dondra is your Representative Payee and is merely custodian of your funds. These funds count as your income, not hers.
Bri2k
Oh yes, we’re married. Sorry, should have been clearer. Thanks, guys!
Q
Well, then you have to either file MFS (Separate) or MFJ (Joint). In general, Joint is a better tax deal. YYMV, see a qualified tax rep, preferably a Enrolled Agent or CPA. But the fact your funds go into her acct do not significantly affect this.
Thanks, once again. There’s the matter of the lump sum disability payment and then they also credited a smaller payment for 2009, which may reduce what I have to pay, if anything. I think your suggestion about going to a CPA/qualified tax preparer is a good one, and we’ll definitely follow up on that, thanks!
Q
As DrDeth says, married filing jointly is usually the better deal - in nearly 30 years here, we’ve had precisely ONE year where we did slightly better by filing separately (some funkiness in IRA deduction rules, a loophole that was closed the following year).
Until you see a professional, you can play around with the online versions of TurboTax (and maybe TaxAct), and see what the various filing options would do to your overall tax bill. Try filling in the numbers for each of you separately (as married filing separately), then for the two of you together as married filing jointly. I don’t know a lot about how disability income is treated, tax-wise, but perhaps that might change things enough that filing separately is the better choice.
Lump sum Social Security disability is taxable. Make sure you save a chunk of it to pay IRS the year that it is received.
(insert mongo yuck face here)
~VOW
Ouch - yes, though this link suggests that there are ways of reducing that. It sounds like a good idea to consult a professional, anyway.
Yes, I checked into that today, y’all. There’s a formula and if you don’t go over a certain amount, you may not have to pay any tax.
Thanks!
Q