Married but Filing Separate Claiming Dependents

[JustHERE1]

My spouse and I file separately and have two children, can each of us claim one child?

It seems like the FEDS make the person with the higher AGI claim the children, unless you have one of these circumstances:

• You lived apart from your spouse during the last 6 months of the year
• Your home was the qualifying person's main home for more than half of the year
• You paid for more than half of the cost of keeping up that home for the year,

We have to file separately even though it is not the most beneficial thing. But were hoping to each claim a child to take advantage of FSA dependent care accounts. 

[xmasbaby0]

You will not get childcare credit if you file MFS.   But if you really want to file MFS, you can each claim one of the children.   When you file MFS the BIG rule is that you both have to file the same way----you either both itemize or both use standard deduction.

If you were legally married at the end of 2023 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 $27,700 (+$1500 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 since with online, you get one return per fee.

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...

[JustHERE1]

@xmasbaby0 

I completely understand that and have filed married but separately for years. This is the first time with 2 dependent and I have tried to have each of us file 1 kid. However, going through the TurboTax interview it always assigns both kids to the highest income earner. Because we do not meet the following requirements:

• You lived apart from your spouse during the last 6 months of the year
• Your home was the qualifying person's main home for more than half of the year
• You paid for more than half of the cost of keeping up that home for the year,

Is it possible for each of us to claim 1, I have found lots of conflicting information.

[xmasbaby0]

If the two of you are arguing about who claims the kids, the rules you cited can be used as tie-breakers.   If you each agree to one child per parent you are okay to do that.

[Hal_Al]

Q. My spouse and I file separately (MFS) and have two children, can each of us claim one child?

A. Yes.

Q. Does the person with the higher AGI  rule prevent us from each claiming a child? 

A. No. The higher AGI is only a tie breaker rule if the two of you can't agree on who will claim a child. 

Q. What is this all about?

• You lived apart from your spouse during the last 6 months of the year
• Your home was the qualifying person's main home for more than half of the year
• You paid for more than half of the cost of keeping up that home for the year,

A. It has nothing to do with claiming children.  If you are married, you may only file as Married Filing jointly (MFJ) or Married Filing Separately (MFS). You may not use Single or Head of Household (HoH) filing status. An exception: you may use HoH filing status if you meet those three conditions. 

[JustHERE1]

@xmasbaby0 

We agree but the TurboTax software won’t let us do it. They always assign the 2 dependents to the highest income earner, I can’t find a work around using TurboTax.

[JustHERE1]

@Hal_Al 

I appreciate the response.  The TurboTax software always assigns the 2 dependents to the highest income earner, I can’t find a work around using TurboTax.

The 3 questions they always ask in the interview walkthrough are:

• You lived apart from your spouse during the last 6 months of the year
• Your home was the qualifying person's main home for more than half of the year
• You paid for more than half of the cost of keeping up that home for the year

Then TurboTax assigns the dependents to the highest earner. I guess I will continue to try to find a way around this in the software. 

[xmasbaby0]

Not sure what you are doing.   If you are preparing two separate returns, how is the software getting any information about the other child from one of your returns?   You should only be entering one child on each return.   

[xmasbaby0]

@JustHERE1 And.....those questions you are citing are questions being asked to see if you can file as Head of Household.  If all of you live together, neither one of you can file as HOH.   You are doing something incorrectly in My Info when you go through those screens.

[JustHERE1]

@xmasbaby0 

I do have both kids listed on the my info section. I am guessing that is the issue. I will start each return over again to see if that solves the issue.

Thanks for the help, hopefully this solves the issue. 

[Hal_Al]

After answering that the other parent has the higher AGI, you will be asked if the other parent has waived their right to claim the dependent. Check yes. 

[JustHERE1]

@Hal_Al 

I have tried that but was not eligible to do a form 8332 because we are both custodial parents and live with the dependents full time, split expenses and split mortgage. According to the TurboTax software. 

The only reason we file married but separate is for the significant savings we save because of her student loan. Our financial advisor ran the numbers and the tax disadvantages are worth it to us.

We each want to claim a child to take advantage of FSA dependent accounts. @xmasbaby0 Advised to just take off one child from each return in the myinfo section, so we do not run into the software always assigning it to the highest earner. 

[AmyC]

Yes, each return should list the one child being claimed on that return.

[Opus 17]

---

@JustHERE1 wrote:

@xmasbaby0 

We agree but the TurboTax software won’t let us do it. They always assign the 2 dependents to the highest income earner, I can’t find a work around using TurboTax.

---

I suspect you are getting hung up on the custody questions.  The dependent interview is designed for situations involving divorced or separated parents who share custody.  It has problems with married people filing separately for financial reasons or with unmarried parents living together.

Each spouse should only list the child they plan to claim.  Answer "no" to any questions about custody or the other parent.  Completely delete the child you don't plan to claim. 

[JustHERE1]

@xmasbaby0 

After deleting the child I wasn’t claiming I was able to work through it just fine. It seems like you are right the interview questions steer you down a confusing path for my situation.

thanks for the help!