tax memo

Topics: Marriage, Tax, Divorce Pages: 3 (697 words) Published: October 13, 2014
September 10, 2014
TAX MEMORANDUM
FROM:
SUBJECT: Brett and Kathy
Engagement: Issues

Brett and Kathy’s filing status used to be married, filing jointly. Although both of Brett and Kathy want to get divorce, they have not divorced considering financial pressure and their three children. From 2014, Brett begins to contribute more than Kathy do to support the home and their children. Also they want to file income tax returns separately. Thus Brett believes he can claim head of household filing status.

Issues: Is Brett qualified as head of household? Can Brett and Kathy file tax income separately? What is the most appropriate filing status for Brett and Kathy?

Under code section §2(b)(1), a taxpayer is eligible for head of a household filing status “if, and only if, such individual is not married at the close of his taxable year”. Code section §2(b)(2)(A) provides that an individual who is not married must get a decree of divorce or separate maintenance and separate from his or her spouse. Based on the statement of Brett and Kathy, they do not divorce and still live together. Although Brett and Kathy have contemplated getting a divorce, they are still filed as married couples status. So Brett and Kathy are not qualified for head of household since they are still married at the end of 2014.

In the case LARAIA v. US., Cite as 13 AFER 2d 1106 (232 F. Supp. 602), (DC-MA), the plaintiff claimed to get the status of head of household. The plaintiff got divorced with his wife in 1958 but he lived apart from his wife and children prior to 1957 because his sales business. So the commissioner did not allow his head of household status on the ground that he did not live together with his children. Finally, the court supported the plaintiff of his position because his special divorce situation and he lived with his children since 1958. The plaintiff was qualified as head of household in the case because he was divorced, paid more than a half...
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