How to split income from joint accounts and revocalble living trust accounts when married filing separately

[John]

We are in Massachusetts and will be MFS on the state return.
The revocable living trust has us both co-trustees.

Do we allocate income by SSN on the 1099?
Do we allocate 50-50?
Is there some other formula?

Thanks in advance.

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[Stuart O. Bronstein]

John <jm...@yahoo.com> wrote:

> We are in Massachusetts and will be MFS on the state return.
> The revocable living trust has us both co-trustees.
>
> Do we allocate income by SSN on the 1099?
> Do we allocate 50-50?
> Is there some other formula?

Massachusetts is an equitable distribution state. Normally that would
mean that you each claim your own incomes on your individual tax
returns. It's not 50/50. The trust is transparent for tax purposes so
doesn't change that result.


--
Stu
http://DownToEarthLawyer.com

[John]

On Tuesday, August 29, 2023 at 3:17:11 PM UTC-4, Stuart O. Bronstein wrote:

> Massachusetts is an equitable distribution state. Normally that would
> mean that you each claim your own incomes on your individual tax
> returns. It's not 50/50. The trust is transparent for tax purposes so
> doesn't change that result.
>
>
> --
> Stu
> http://DownToEarthLawyer.com
> --

Thanks for your reply.

I'm not sure what equitable distribution means outside of a divorce. We're not getting divorced.

Does that mean 1099s for joint/trust accounts with my SSN are my income and 1099s for joint/trust accounts with her SSN are her income, and we each report our own W-2 income?

Or do you mean something else?

[Stuart O. Bronstein]

John <jm...@yahoo.com> wrote:
> Stuart O. Bronstein wrote:
>
>> Massachusetts is an equitable distribution state. Normally that
>> would mean that you each claim your own incomes on your
>> individual tax returns. It's not 50/50. The trust is transparent
>> for tax purposes so doesn't change that result.
>

> I'm not sure what equitable distribution means outside of a
> divorce. We're not getting divorced.
>
> Does that mean 1099s for joint/trust accounts with my SSN are my
> income and 1099s for joint/trust accounts with her SSN are her
> income, and we each report our own W-2 income?
>
> Or do you mean something else?

For the most part you're right, equitable distribution is really only
relevant with respect to divorce. But what it also means is that
it's not community property. When it's not community property, then
money earned by either of you goes on your personal tax forms, and
income earned on property that you own goes on the tax return of the
person who owns that property. Normally that is what is reported on
the 1099s, though that's not necessarily the case.

If you own something together, normally that would be reported on a
partnership return, though it's not necessarily required. If you own
something together and payment comes in under one person's 1099, then
you should issue a nominee 1099 showing how much of that income
should be reflected on the other spouse's tax return.

--
Stu
http://DownToEarthLawyer.com

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