Tax refunds when changing filing status

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Q. On our 2017 tax return to New Jersey, we got a refund and applied it to our 2018 tax year because my wife cannot have taxes deducted automatically by her employer. Therefore, when we each file for 2018, do I take the refund and split it in two and we each get to apply our half to our individual returns, or can we split this applied refund any way we wish so long as the total is the same as that applied from 2017?
— Taxpayer

A. It’s a complex question

In 2018, it sounds like you anticipate filing a married filing separate return, said Janice Roberts, an accountant with Wilkin & Guttenplan in East Brunswick.

She said you can file separate returns and each report your own income, exemptions and deductions and credits on your own return, and you are each responsible for the tax on your respective returns.

“In order to claim a portion of the refund applied from 2017, include a separate explanation, in writing, indicating your spouse’s Social Security number and a reconciliation of the whole refund and how you are applying it to each of your separate tax returns,” she said.

Also, you and your wife may consider paying New Jersey estimated taxes on your wife’s wages as her employer does not do so, Roberts said.

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