@peachette19 wrote:
Hmm. The instructions to 2441 seem pretty clear that you can... if you meet conditions two through five, you can take the exclusion (below). I also paper filed last year with a note explaining this, and it was accepted. I just couldn’t get the tax software to do this. Why do they tell MFS couples to each put in $2500? If only one can exclude from income? It makes no sense. A “qualifying person” is someone you CAN claim as a dependent but not necessarily a dependent.
Married Persons Filing Separately
Generally, married persons must file a joint return to claim the credit. If your filing status is married filing separately and all of the following apply, you are considered unmarried for purposes of claiming the credit on Form 2441.
-
You lived apart from your spouse during the last 6 months of 2020.
-
Your home was the qualifying person's main home for more than half of 2020.
-
You paid more than half of the cost of keeping up that home for 2020.
If you meet all of the requirements to be treated as unmarried and meet items 2 through 5 listed earlier, you can generally take the credit or the exclusion. If you don't meet all of the requirements to be treated as unmarried, you can’t generally take the credit. However, you can generally take the exclusion if you meet items 2 through 5.
If you meet the special conditions, then you also qualify to file as head of household. Filing MFS instead of HOH when you qualify for HOH is a huge mistake, because there are lots of other tax benefits that are denied to MFS. HOH is allowed to use a dependent care FSA and the credit, so what you are doing is telling the IRS that you qualify for HOH but are choosing to file MFS and pay more tax.
Remember the first special condition is You lived apart from your spouse during the last 6 months of 2020. That means your spouse was legally separated and living apart, or on an out of state assignment, or incarcerated, or in some other way not living with you and not part of your household for all of the last 6 months of the year.
If you don't meet all the special conditions, then MFS filers can use a $2500 FSA and can't take the credit at all.
