To itemize or not?

[Whoviana]

So my new hubby is self employed and doesn't have a tax id, he operates under his SSN.  We are filing separately so the question is since I've never done this before .... Is his return going to impact whether or not I do itemized on my return.  He is most certainly itemizing his biz receipts for his taxes.  I know normally for married folk if one is itemized the other must also be, would that still apply here?

[Critter-3]

Filing separately is not usually the best option ... if one spouse itemizes deductions the other MUST also itemize deduction EVEN if they have none to take.  And if you live in a community property state things get even messier.  So before either of you files it is best to compute the returns both ways and choose the best option for your situation. 

Is it better for a married couple to file jointly or separately?

Generally, filing jointly will give you a bigger refund or less taxes due. When you file separately, your tax rate is higher and you won't be able to claim:

• Education benefits
• Earned Income Credit (EIC)
• Child and Dependent Care Credit (usually)
• Adoption Credit (usually)
• The same benefit married filing jointly couples get for personal exemptions, itemized deductions, the Child Tax Credit, and capital losses (all of these deductions are reduced by half)
• The standard deduction if your spouse is claiming itemized deductions

On top of that, if you live in the community property states of Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin, you have to deal with community property allocations and adjustments, which adds extra work and complexity to your tax preparation chores.

Tip: Only taxpayers who were still legally married as of December 31 are able to file as married, whether jointly or separately.

Filing jointly means you file one tax return. When filing separately, you file two tax returns.

Want to Compare?

You can compare filing jointly vs. separately with TurboTax's free calculator TaxCaster. It will give you the estimated tax differences when filing either way. It’s up-to-date with the latest tax laws and can estimate your 2019 taxes as well.

Why would I want to file separately?

The main reason you'd want to file separately is to protect yourself from inaccurate tax information reported by your spouse, or in cases where your spouse refuses to file a joint return (or refuses to file, period) and you don't want to get in trouble.

Also, when you file separately, your refund cannot be seized to pay off your spouse's debts. However, filing jointly as an innocent or injured spouse can head off refund seizures as well.

With all that in mind, you can try it both ways to see which filing status works out better for the both of you. If you do this, also consider your state return; in some cases, the taxes saved on the state return more than makes up for the money lost on the federal, or vice-versa.

You can try the different ways with TurboTax's free calculator TaxCaster. It will give you the estimated tax differences when filing either way. It’s up-to-date with the latest tax laws and can estimate your 2019 taxes as well.

Filing Separately? Use TurboTax CD/Download

If you decide to file separately, we suggest you use TurboTax CD/Download for Windows or Mac, as you can file up to 5 returns within the program. If you use TurboTax Online, you'll have a separate fee for each return.

Related Information:

• How can we compare married filing jointly with married filing separately?
• How do I switch from filing jointly to filing separately?
• How do I file Form 8379, Injured Spouse Allocation?
• What is an innocent spouse and how does it differ from an injured spouse?

[Critter-3]

How can we compare married filing jointly with married filing separately?

If you already created a joint return in the TurboTax CD/Download software, there's a quick way to see how filing separately affects your federal return.

Note: This won't work in TurboTax Online.

1. Open your return and select Forms in the top right corner of the window.
2. Click Open Form and type What-If Worksheet (it may appear as What-If Wks).
3. Check the MFJ vs. MFS box at the top.
4. Scroll down to Balance Due (Refund) located under Line 74.
   • The second column shows the federal outcome for a joint return, and the third and fourth columns, respectively, show the outcome for the taxpayer and spouse if filing separately.
   • Negative numbers are refunds, positive numbers are taxes due.

However, this doesn't give you the whole picture because it doesn't account for your state return. For a true apples to apples comparison, you'll need to prepare your returns both ways.

Related Information:

• How do I switch to Forms Mode in the TurboTax for Windows software?
• How do I switch to Forms Mode in the TurboTax for Mac software?
• How do I switch from filing jointly to filing separately?

[xmasbaby0]

The other thing you are confusing is that your self-employed spouse will be preparing a Schedule C for his business expenses.  That is NOT the same as the itemized deductions that can go on a Schedule A for either one of you.  You need to learn the difference between them.  Even if he used his standard deduction for his income, he could use his business expenses (like mileage, supplies, tools, etc.) on a Schedule C.

https://ttlc.intuit.com/questions/3398950-what-self-employed-expenses-can-i-deduct

[Opus 17]

"Itemizing" only refers to personal deductions on schedule A (mortgage interest, property taxes, gifts to charity, medical expenses, and state and local taxes).  If one of you itemizes the personal deductions on schedule A, then both of you must do so.  His business expenses are reported on schedule C and have nothing to do with the personal deductions.

Separately, your spouse can get an EIN (business tax number) from the IRS web site for free in about 15 minutes.  It doesn't change anything about his tax return -- he will still file the same schedule C as usual -- but it saves having to give his personal SSN to his client and vendors. 

https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-n...

[Carl]

Don't know why you're filing separately if your status was married on Dec 31 of the tax year. But folks to have their reasons so I won't pry. Just be aware that when a married couple files separate, they BOTH automatically lose out on deductions they would otherwise qualify for if they filed joint. One of you having a business is not justification by any stretch of the imagination for filing separate.

Business expenses are "NOT" a SCH A deduction. No exceptions here. Business expenses are a business deduction taken directly against the business income, and it does not matter if you itemize other deductions on SCH A or not.

Until your itemized deductions on SCH A (which does not include business deductions) exceed your standard deduction, it will make absolutely no difference to your tax liability at all. Doesn't matter if you file separate or joint.

However, what will have the potential of making a difference if you file separate returns, is the deductions you will both automatically disqualify for. For example, neither of you can take any education expense deductions, or some of the dependent child related deductions if kids are involved here. That's just the tip of the iceberg.