Is it sensible to file separate taxes with the fifth rule of splitting incomes?
Hello,
My wife will receive a "Deferred Compensation" payout of 60K. This can be done in several annual installments with normal taxation, or as a lump sum payment in 2017 with the fifth rule.
Since I (as her husband) will be receiving retirement income in 2017, a portion of which is taxable at 16K, this retirement income, along with other sources of income (capital gains, rental income), would have a very unfavorable impact on the fifth rule.
For this reason, we do not want to file our tax return jointly in 2017, but submit separate tax returns.
Is there any reason not to proceed with this plan (apart from the fact that the retirement income will be taxed at a higher rate, which we believe will be fully offset by the non-taxation of the 60K DC payout)?
Best regards,
pk
