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Issue 40785

Filing threshold for Married Filing Separately

Issue Statement: There is a discrepancy in various IRS publications concerning the filing threshold for taxpayers who are married and file separately. This leaves many people within this status unsure as to whether or not they need to file a tax return. Namely, Publication 54 states that this threshold is $12,000 whereas the other publications reviewed state that this threshold is $5. It is important that the 1040 instructions booklet and Publications 17, 54, 501, 570 and any other applicable IRS documents be corrected to clearly and consistently identify the proper tax threshold for taxpayers filing as married filing separately.

Goal Statement: The goal is to make corrections to any guidance referencing the filing threshold for taxpayers who are married and filing separately.

TAP RECOMMENDATION

ID 40785

1. The first solution to this problem requires a determination as to which amount, $5 or $12,000, is the correct threshold for taxpayers who are married and filing separately or whether either amount is correct.

Based on the correct amount

2. Correct Chart A on Page 10 and Chart B on Page 11 of the 1040 Instructions (Cat. No. 24811V).
3. Correct Table 1 in Publication 501 (“Dependents, Standard Deduction and Filing Information”- Cat. No. 15000U).
4. Correct Table 4-1 on page 21 of Publication 570 (Tax Guide for Individuals With Income From U.S. Possessions) Cat. No. 15118B.
5. Correct Table 1-1 on page 6 of Publication 17 (“Your Federal Income Tax For Individuals” – Cat No. 10311G).
6. Correct page 3 of Publication 54 (“Tax Guide for U.S. Citizens and Resident Aliens Abroad”- Cat. No. 14999E)

IRS Action:Partially adopted

ID 40785

1. Instructions for Form 1040-NR.

Not Adopted.
CC:INTL:01 and CC:WI requested the removal of the $5 threshold. Per Treas. Reg. § 1.6012-1(b)(2)(i) expressly requires that Form 1040-NR be filed when an NRA (“nonresident alien”) is ETB
(“engaged in a U.S. trade or business”) even if the amount of gross income for the taxable year is less than the minimum amount specified in IRC 6012(a) for making a return. There are few NRAs that are not ETB so the mention of this limit is confusing.
CC:INTL:01 requested the removal of the $12,000 (the standard deduction based) threshold. For the same reason the $5 threshold was removed, especially since the only NRAs who can take the standard deduction are students and business apprentices meeting the criteria in Article 21 of the United States-India Tax Treaty. There would be even fewer (if any) NRAs falling into this category that are not ETB so again the mention of this limit would be confusing.

2. Chart A and Chart B in the Form 1040 instructions are correct. Therefore, there is no action that needs to be taken.
3. Table 1 in Publication 501 is correct. Therefore, there is no action that needs to be taken.
4. Table 4-1 in the 2018 Publication 570 was correct when released to the public on February 22, 2019. The 2019 Publication 570 will have the correct information in Table 4-1 when released to the public by the end of February 2020.
5. Table 1-1 in Publication 17 is correct. Therefore, there is no action that needs to be taken.
6. The 2018 Publication 54 was released to the public on December 27, 2019, with the corrected table on page 3 of the publication. Earlier, on September 6, 2019, we had posted a correction as a Recent Developments article on the Publication 54 product page at www.irs.gov/Pub54. The 2019 Publication 54 was released to the public in December 2019 with the correct information in the table on page 3.

 

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