I knew it had existed, although only briefly, but thought it was from the mid to late 1970s. It actually was in effect for tax years 1982 through 1986.
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What am I talking about? Why IRS Schedule W – “Deduction for a Married Couple When Both Work”. It was created to provide relief from the “marriage penalty”.
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I had first mentioned the Schedule W in last Saturday’s BUZZ post when commenting on the new IRS Schedule L.
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According to the instructions for the 1983 Schedule W “Complete this schedule and attach it to your 1040 if you take the deduction for a married couple when both work.” The deduction, an “Adjustment to Income” (above-the-line), was available if both husband and wife “work and have ‘qualified earned income’ {i.e. - W-2 or self-employment income less adjustments to income for employee business expenses and IRA and Keogh contributions - rdf}” and “file a joint return”.
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I rediscovered this deduction going through the Tax Analyst’s “1040 Achieve”, where you can download the federal Form 1040 from the original 1913 version through 2006. Upon finding it in 1982 I went to my client files and pulled out the folder for a client whose 1040 I have been preparing since 1981.
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While I am only required by law to keep copies of the current and three previous years’ returns, I actually have copies of all returns I have filed for as long as a person/couple/surviving spouse remains a client. There is one file, originally a client of my mentor, which has copies back to the late 1960s!
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To calculate the deduction you would first determine the individual net “Qualified Earned Income” for each spouse. The deduction was 10% (5% for 1982) of the lesser of the lower net qualified earned income or $30,000.
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The 1983 Schedule W for my client showed that the husband had W-2 earnings of $37,226 and the wife had a W-2 for $16,800. Neither had any applicable adjustments to income, so the deduction was $1,680 – 10% of the wife’s $16,800 Form W-2. If the wife’s W-2 had been for $33,600 the deduction would be limited to $3,000 – 10% of $30,000.
.
.
What am I talking about? Why IRS Schedule W – “Deduction for a Married Couple When Both Work”. It was created to provide relief from the “marriage penalty”.
.
I had first mentioned the Schedule W in last Saturday’s BUZZ post when commenting on the new IRS Schedule L.
.
According to the instructions for the 1983 Schedule W “Complete this schedule and attach it to your 1040 if you take the deduction for a married couple when both work.” The deduction, an “Adjustment to Income” (above-the-line), was available if both husband and wife “work and have ‘qualified earned income’ {i.e. - W-2 or self-employment income less adjustments to income for employee business expenses and IRA and Keogh contributions - rdf}” and “file a joint return”.
.
I rediscovered this deduction going through the Tax Analyst’s “1040 Achieve”, where you can download the federal Form 1040 from the original 1913 version through 2006. Upon finding it in 1982 I went to my client files and pulled out the folder for a client whose 1040 I have been preparing since 1981.
.
While I am only required by law to keep copies of the current and three previous years’ returns, I actually have copies of all returns I have filed for as long as a person/couple/surviving spouse remains a client. There is one file, originally a client of my mentor, which has copies back to the late 1960s!
.
To calculate the deduction you would first determine the individual net “Qualified Earned Income” for each spouse. The deduction was 10% (5% for 1982) of the lesser of the lower net qualified earned income or $30,000.
.
The 1983 Schedule W for my client showed that the husband had W-2 earnings of $37,226 and the wife had a W-2 for $16,800. Neither had any applicable adjustments to income, so the deduction was $1,680 – 10% of the wife’s $16,800 Form W-2. If the wife’s W-2 had been for $33,600 the deduction would be limited to $3,000 – 10% of $30,000.
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The Schedule W discussed above should not be confused with George W's Schedule W - click here.
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BTW – in my search of 1040s of the 1970s I came across a credit available on the 1975 return only for “Purchase of New Personal Residence” claimed on Form 5405 (the same form number currently used for the First-Time Homebuyer Credit). So it is true that "everything old is new again"!
.
TTFN
BTW – in my search of 1040s of the 1970s I came across a credit available on the 1975 return only for “Purchase of New Personal Residence” claimed on Form 5405 (the same form number currently used for the First-Time Homebuyer Credit). So it is true that "everything old is new again"!
.
TTFN
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