Some couples live together but can’t or won’t get married. If so, they
both file tax returns as single taxpayers. Some savvy planning may trim
the overall tax bill.
* Charitable donations. The individual with the higher income generally
should write the checks for contributions to charity. In a higher tax
bracket, the deduction will save more tax.
* Mortgage interest. Similarly, these deductions will be worth more in
a higher tax bracket so the individual with more income should write
the checks. That person should be liable for the mortgage and should
be the person on record with the lender as the primary borrower, to
clarify reporting to the IRS.
* Property taxes. Again, the high-bracket partner will get more value
from writing the checks and taking the tax deductions. However, state
and local tax payments, including property tax, provide no benefit if
the taxpayer owes the alternative minimum tax (AMT). In that case, the
low-bracket partner should be an owner of the home, and should pay
the property tax bill.
