Thank you for the question. Keep in mind that there are several disadvantages to filing Married Filing Separately ("MFS")a. They include:
- Not being able to take a deduction for student loan interest.
- Typically being limited to a smaller IRA contribution deduction.
- Being disqualified from several tax credits and benefits available to those married filing jointly, which include the Child and Dependent Care Credit.
- Both spouses will either need to both itemize or use the standard deduction. They cannot choose different methods.
I can understand why it has been suggested to file as MFS if you are in different states though. It would in most cases make the state filings easier. There are states that allow you to file Married Filing Jointly Federal and MFS in the State (Kentucky and Virginia come to mind.) though this would require you to use Turbo Tax Desktop.
Generally the spouse with the higher income should claim the Child Tax Credits. If your spouse is claiming the credits in Part 3, you should remove any credits from your Part 3. You would both want to change Part 1 to Married filing MFS as well.
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