Can two people claim childcare credit, home credit and child credit if filing separately? If we are "common law" married can we file joint?

[ersaen]

My fiancee and I, been together 7 years with 2 kids, live together and I have questions about filing. Foremost if we fall under "common law marriage" in Texas can we file jointly? (We own the home together and have our bank account together) If we file separately and make the same income who files head of household? Can we both claim children? Can we both claim childcare expenses? If the house is under my name, and he is co-owner, can we both claim the home? We are also both students can we both qualify for education credits? Also previously I qualified for the EIC, will we both be qualified if we both claim a child? We donate to the church monthly is that something we can report? 

[SweetieJean]

<a rel="nofollow" target="_blank" href="http://statelaws.findlaw.com/texas-law/common-law-marriage-in-texas.html">http://statelaws.findlaw.c...>

[ersaen]

Thanks!

[Opus 17]

Church donations are an itemized deduction on schedule A.  Whether you actually benefit will depend on all your other deductions and income.  You can enter them in the program and see what happens.

[ersaen]

Thanks! We tell everyone we're married and have rings but I also use the word "financee" when I'm unsure if it's justified

[Opus 17]

Then under Texas law you are married and can stop using the word fiancee.

[Opus 17]

First, you said "fiancee" so you probably already failed at common law marriage.  Common law marriage requires that you meet a number of strict tests, one of which is that you hold yourself out to your community as married.  By referring to your partner as a fiancee and not a wife/husband/spouse, you are showing that you don't think of yourself as married, so (in all likelihood) you don't meet the requirements for common law marriage.  

As single persons you file single tax returns, with or without dependents.  If one of you pays more than half the household expenses, and provides care in that household for one or more qualifying child dependents, that person can file as head of household.  You can't both file head of household.  Income doesn't matter, it goes to whoever pays "more than half" of the expenses.  Paying for child support to a previous partner, for example, is not paying for the current household expenses.  And more than half only needs to be $1 more than 50%.  I'm sure one of you pays at least $1 toward living expenses than the other.

Since you must file as single or HOH, each one of you separately qualifies for the child tax credit, the dependent care credit, and EIC, based on the dependents and facts of that particular tax return.  However, each child can only be claimed once.  The only way to know which combination of dependents gives you the lowest tax or largest refund is to test them separately.  

If you are the only owner of the home, then only you can deduct mortgage interest and property taxes.  If you were married, your ownership is imparted to him.  

If you want to go down the common law marriage road, if you file two separate returns under "married filing separately" you are ineligible for the dependent care credit and ineligible for EIC, and ineligible to use the head of household status.  You would have to file one return as "married filing jointly" that lists all your combined income and deductions, to use the tax benefits of EIC and the dependent care expense credit. 

Here are the rules on common law marriage in Texas.  Be aware that once you decide you are common law married, then the only way to split up is a full legal divorce, with courts and lawyers and alimony and child support, just as if you had been married by a legal officiant.  http://statelaws.findlaw.com/texas-law/common-law-marriage-in-texas.html

[SweetieJean]

How have you filed over the past 7 years?

[ersaen]

I've only filled twice and him once, both separate. We are both 21 years old.

[Opus 17]

So remember this, if you decide you are married and file a return using married filing jointly, you aren't just married on this tax return.  You are married forever in the eyes of the state of Texas and therefore everywhere else.  You must file every subsequent tax return as married and do everything else for the rest of your life (unless you get a divorce) as if you are married -- credit card applications, mortgage, buying a car, etc.  Once done it is very difficult to un-do, so take it seriously.

Financially, you are probably better still calling yourselves unmarried (fiancee, etc) especially if one has low enough income for EIC but combined you don't.

[ersaen]

Also, only I have ever claimed children.

[Opus 17]

Well, based on your answer above you are married.  That means your only legal choices are to file two separate returns as "married filing separately" or one joint return as "married filing jointly".  Filing two returns as "single" would be breaking the law.  

With MFJ, you file one return that lists all your income, dependents, deductions, and credits.  You get whatever you get and there really isn't any strategy to make it better or worse.

With MFS, you file two separate returns, one listing your income and deductions, and the other listing his income and deductions.  You can divide the children any way you want but each child can only be listed on one tax return.  (Don't even list the children you aren't claiming in turbotax, because the interview can be slightly confusing in this situation and may lead to an error.)  With MFS you can alter things a bit by deciding who claims which children (2 and 0, 1 and 1, or 0 and 2) but with MFS you are automatically ineligible for EIC and the dependent care expense credit.

[ersaen]

You're being extremely helpful and I greatly appreciate it!