1098 in Illinois

[erezek]

Due to student loans, my husband and I file MFS because it significantly lowers our monthly payments toward our loans and we are looking to eventually file for PSLF once we reach the qualifying payments. We bought our first home this year and I am very confused about the 1098 form. Itemizing is not in our best interest for the largest return in our current situation so do I have to file the 1098 form? Do I have to report anything about buying our home in our taxes? I tried to file with the Standard Deduction on TurboTax, but it is still asked me for this information and I want to make sure I file everything correctly. I am in Illinois. Thanks in advance! 

[xmasbaby0]

If you file MFS you each have to file the same way.  So either you both just use your standard deduction or you both itemize.   If you are just using your standard deduction, then you do not get to enter mortgage interest or property tax paid.   If you and spouse are using standard deduction, neither one of you enters anything about your 1098 from the lender.

If you want to itemize deductions, then both of you have to enter itemized deductions.  So .....somehow you have to divide up the amounts paid for mortgage interest, property tax, etc. between your two returns.

If you were legally married at the end of 2022 your filing choices are married filing jointly or married filing separately.

Married Filing Jointly is usually better, even if one spouse had little or no income. When you file a joint return, you and your spouse will get the married filing jointly standard deduction of $25,900 (+$1400 for each spouse 65 or older)  You are eligible for more credits including education credits, earned income credit, child and dependent care credit, and a larger income limit to receive the child tax credit. 

If you choose to file married filing separately, both spouses have to file the same way—either you both itemize or you both use standard deduction. Your tax rate will be higher than on a joint return. Some of the special rules for filing separately include: you cannot get earned income credit, education credits, adoption credits, or deductions for student loan interest. A higher percent of your Social Security benefits may be taxable. Your limit for SALT (state and local taxes and sales tax) will be only $5000 per spouse. In many cases you will not be able to take the child and dependent care credit. The amount you can contribute to a retirement account will be affected. If you live in a community property state, you will be required to provide additional information regarding your spouse’s income. ( Community property states:  AZ, CA, ID, LA, NV, NM, TX, WA, WI)

 If  you are using online TurboTax to prepare your returns, you will need to prepare two separate returns and pay twice.

https://ttlc.intuit.com/questions/1894449-married-filing-jointly-vs-married-filing-separately

https://ttlc.intuit.com/questions/1901162-married-filing-separately-in-community-property-states

https://ttlc.intuit.com/questions/1894449-is-it-better-for-a-married-couple-to-file-jointly-or-separ...

[Critter-3]

Even if you don't enter the mortgage interest you should enter the real estate taxes paid because Illinois has a credit for taxes paid on your personal residence.

[Carl]

To further clarify:

When filing MFS, if one itemizes deductions, then both must itemized - even if the itemized deductions of one of you is zero.

If one takes the standard deduction, then you must both use the standard deduction - even if the itemized deductions of one of you would be higher. With the standard deduction you do not need to bother with entering the mortgage interest. However, if your state allows a  deduction for property taxes, you should still enter your property taxes. Even they they may not help on the federal return, they could help on the state return.