My significant other and I purchased a house in 2020. We're going to get married but would like to do it in the best way possible for our taxes in 2020. Should we get married before the next tax deadline and file jointly with our new mortgage? Should we not marry this year and file as individuals with 50/50 on the mortgage? Or is there a third option I'm not seeing?
For income tax return purposes, your filing status is determined by the last day of the tax year--not by the tax filing deadline. So if you want to file as married for a 2020 tax return you have to be legally married by December 31, 2020. If you wait and get married in 2021 then for 2020's tax returns you are both Single, and for 2021 (which you file in 2022) you can file as married--assuming you get married in 2021.
I read through the thread. I have some more questions. We bought the home early in 2020 (end of feb). So, we'll have a full year's worth of mortgage payments. Would that be enough to warrant itemized deductions? If so, should we get married in order to make filing easier?
Also, we moved from CA to WI for his job. I work from home full time for my job in California. I use a home office and I had to purchase furnishings in order to work (desk, chair, internet, etc.). My employer did not compensate for my new work environment. Would I be able to deduct that portion of the house for business purposes? Would I also be able to itemize this?
If you read through that other thread then you must already be aware that it is very hard for most people to use itemized deductions since the tax laws and the standard deductions changed after 2017. You can try using the taxcaster tool to see how your tax returns may look for 2020:
Or--if you are tying to base the VERY important decision as to when to get married on income taxes for 2020, buy the desktop software for 2020 and use it to prepare some "dummy" returns as Single or Married Filing Jointly to compare, and see how it turns out. If you use desktop, you can prepare an unlimited number of returns to try out various scenarios.
...."My employer did not compensate me.....
If you are a W-2 employee you cannot deduct a home office on your federal return. As of the tax laws that changed for 2018 and beyond, W-2 employees cannot deduct job-related expenses on a federal return.
And....you have not asked about this (yet) but in case you need to compare:
If you were legally married at the end of 2020 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 $24,800 (+$1300 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.
If you are not legally married on or before Dec 31 2020, then for each your filing status will be single. Period. Each of you can claim the mortgage interest and property taxes that each of you individually were:
1) Legally obligated to pay, and
2) Actually paid.
If both of your names are on the mortgage and the property deed, then no issues here.
If you are legally married on or before Dec 31 2020, then the "single" filing status is not available to either of you. You must either file as Married Filing Joint, or Married filing Separate.
Since mortgage interest and property taxes are your only deductions, and those are itemized deductions on SCH A, it is very doubtful that your itemized deductions will exceed your standard deduction regardless of weather your married or not, or if you file joint or separate returns if you are married. So unless you have other itemized deductions that will exceed your standard deduction, planning your marriage date for tax purposes is pointless.
If filing single or married filing separate, your standard deduction for 2020 is $12,400
If filing married filing joint, your standard deduction is $24,800.
Again, it is very doubtful your itemized deductions will come anywhere close to your standard deduction, regardless of your marital status, or how you file. Especially with the limits impost on SALT deductions. (State and Local Taxes).