1.) Do you agree that the situation as described would qualify her for
Head of Household status?
Under those circumstances, yes, it would.
2.)Although almost everything I've read on the
subject states that Married Filing Jointly almost always results in a
bigger refund that Married Filing Separately, does it make sense that
MFS/HOH is actually the better way to go?
MFS/HOH will likely result in less tax than both of you filing MFS, but more total tax than filing MFJ.
3.) Is it ok that I claim all
of the mortgage interest and property tax on our house as long as she's
ok with it (she is)?
Yes. A married couple can allocate mortgage interest between them as they choose.
Also note that HOH is an exception to the basic rule for separated spouses. If you itemize deductions filing MFS she
does not have to also itemize, but can claim the standard deduction. That's because, as HOH, she is considered not married.
