Have any of your clients using the pro-rata approach been audited yet? I'm worried that might be seen as too simplified if the actual spending pattern wasn't evenly distributed throughout the year.

None of our clients using this approach have been audited yet. You raise a valid concern though. If a client's business is seasonal or their meal expenses fluctuate significantly throughout the year, a pro-rata allocation wouldn't be appropriate. In those cases, we recommend either analyzing the actual receipts or using a reasonable allocation based on their business patterns (like quarterly sales figures or similar metrics that would correlate with business meal activity).

I haven't seen any serious legislation proposed to extend it. There was some industry lobbying from restaurant associations, but it doesn't seem to have gained traction. I'd proceed with the split approach rather than counting on a retroactive extension.

Thank you for mentioning this. I honestly hadn't even thought about the medical deduction angle. Between his cancer treatments and my surgeries, we easily spent over $15,000 out of pocket even with insurance. Do things like hospital cafeteria meals and parking at medical facilities count too? I had so many appointments and hospital stays.

Yes, many of those related expenses do count! Transportation costs to and from medical treatments (including parking fees at hospitals and medical facilities) are deductible. While regular meals generally aren't deductible, if you had to stay overnight for medical care, some meal costs might qualify. Also track any home modifications made for medical reasons, medical equipment purchases, and even mileage driven to pharmacies and doctor appointments. The IRS allows 22 cents per mile for medical travel in 2024. Many people miss these "secondary" medical expenses that can really add up over a year of intensive treatment.

That won't help in this case. OP specifically mentioned they don't have any children/dependents, so they wouldn't qualify for the Qualifying Widow(er) status in future years.

I actually just dug through my pay stubs after seeing your comment. You're right - they were taking out about $45 less per month in federal taxes this year compared to last year. That accounts for like $540 of the difference. Still doesn't explain all of it, but that's a big chunk I hadn't noticed. So essentially I was getting more in my checks but then less in my refund? That's so confusing.

That's exactly what happens for a lot of people. The tax system is designed to try to get you to break even - ideally you'd owe nothing and get nothing back. When tax laws change, they adjust the withholding tables, which changes how much comes out of each check. The rest of your missing refund might be from expired tax credits or deductions. The past few years had some temporary tax benefits due to COVID that have now expired. It sucks when your refund drops, but getting more in each paycheck throughout the year is actually better financially - you get to use your money sooner rather than letting the government hold it interest-free.

Yes, the standard deduction adjusts for inflation every year. For 2025, it's supposed to be around $14,600 for single filers and $29,200 for married filing jointly. That's up from 2024. Doesn't help you for your current return, but at least it'll help reduce your taxable income a bit next year.

Thank you so much for explaining this clearly! I didn't realize credits wouldn't be split 50/50 even if income is. That explains the difference in our outcomes. My husband and I are definitely going to find a CPA with specific experience in community property MFS returns for next year. The tax prep industry seems so unregulated - it's scary how many preparers don't understand these forms.

You're welcome! You're absolutely right about the regulation issue. The "Tax Return Preparer" designation has very minimal requirements compared to CPAs or EAs (Enrolled Agents). For a complex situation like yours, I'd recommend finding either a CPA or an EA who specifically advertises experience with community property states and MFS filing. When interviewing potential preparers, ask them directly how many MFS returns they do annually for clients in community property states. If they can't answer that specifically or seem hesitant, keep looking. A knowledgeable preparer should be able to explain exactly how Form 8958 works without consulting reference materials.

Just wanted to add - you can search the IRS website for "Directory of Federal Tax Return Preparers with Credentials and Select Qualifications" to verify credentials. If they're just a PTIN holder with no other credentials, you might want someone more qualified for complicated returns.

Thank you for this! I had no idea about the Earned Income Tax Credit. My income from June-December was only about $25,000 since I started mid-year. Would I still qualify even though my annual salary is higher?

Yes, the EITC is based on your actual income earned during the tax year, not your annualized salary. Since you only worked part of the year and earned about $25,000, you would likely qualify for some amount of EITC. The exact amount depends on your filing status and a few other factors, but it could add several hundred dollars to your refund. When you file, make sure whatever software or service you use checks your EITC eligibility with your actual earned income for the year.

This happened to my sister! The IRS sent letters to both her and my parents, and they had to figure out who should actually claim her. Took months to resolve.