Fiancee and I just bought a house, best way to file for taxes without being married for 2020.

[AsYouWish83]

Hello all you wonderful people!  I hope you're all having a great day 🙂

So my fiancée and I were waiting till we got married to buy a house, but a house came on the market that we loved and now we're in escrow haha.  It's set to close Dec 10th.

We're not married right now, but we wanted to know how we should be filing for 2020 taxes on turbo tax.  Should only one of us claim the house? 

Do we both claim it and turbo tax will ask if we're splitting it? 

Should we go ahead and head to the courthouse and get our marriage license so we can file as a married couple for maximum return? (We're fine with this option, we plan on having a real wedding later)

This is both of our first home and we want to do it right.  We don't have any other deductions and are used to using Turbo Tax for our basic needs.

Thanks for all the help in advance!

-Matt

[VolvoGirl]

If you are not married by Dec 31 you each file as Single.  Don't worry about deducting the mortgage interest in 2020.  You probably won't have enough interest to itemize.  You will probably each take the Standard Deduction.  Unless someone has enough other deductions like medical to itemize.

For 2020 the standard deduction amounts are:

Single 12,400 + 1,650 for 65 and over or blind (14,050)

HOH 18,650 + 1,650 for 65 and over or blind

Joint 24,800 + 1,300 for each 65 and over or blind

Married filing Separate 12,400 + 1,300 for 65 and over or blind

[xmasbaby0 · Accepted solution]

 "We don't have any other deductions ..."

Homeownership is unlikely to have much--if any -- effect on your tax returns if you bought the house late in 2020.

Sine you are still single you both have to file Single---that means you could each enter your own part of the mortgage interest or property tax paid in 2020 on your tax returns.

HOMEOWNERSHIP DEDUCTIONS

It is very hard for a lot of people to use itemized deductions now that the standard deduction is so much higher.  Your home ownership may not have any effect on your tax due or refund, especially if you purchased the house late in the year.  

Standard Deduction
Your itemized deductions have to be more than your standard deduction before you will see a change in your tax owed or tax refund.  The deductions you enter do not necessarily count “dollar for dollar;” many of them are subject to meeting  tough thresholds—medical expenses, for example, must meet a threshold that is pretty hard to reach.  The software program uses all the IRS rules that apply to the expenses you enter, and it tells you if you have enough to use your itemized deductions or if using the standard deduction is more advantageous for you.  Under the new tax laws, some deductions have been capped—there is a $10,000 limit to the itemized deductions for state, local, property and sales taxes. 

2020 Standard Deduction Amounts

Single $12,400   (+ $1650 65 or older)

Married Filing Separate  $12,400   (+ $1300 if 65 or older)

Married Filing Jointly $24,800   (+ $1300 for each spouse 65 or older)

Head of Household $18,650  (+ $1650 for 65 or older)

Home Ownership

There is not a first time home buyers credit on a Federal return. That ended in 2010. If your state has such as credit, you will be able to enter it when you prepare your state return.

Buying a home is not a guarantee of a big refund.  Your deductions for homeownership combined with your other deductions (if any) must exceed your standard deduction to change your tax due or refund. If you purchased your home late in the year, you do not even have a full year of home

ownership deductions.

Your closing costs on your new home are not deductible except for prepaid interest, prepaid property tax or loan origination fees.  There are no deductions for appraisal, inspections, title searches, settlement fees. etc.

Your down payment is not deductible.

Your homeowners insurance for fire, hazard, flood, etc. is not deductible for your own home.

Home improvements, repairs, maintenance, etc. for your own home are not deductible. 

Homeowners Association  (HOA) fees for your own home are not deductible.

Go to Federal> Deductions and Credits> Your Home to enter mortgage interest, property taxes, private mortgage insurance (PMI) and loan origination fees (“points”) that you paid in 2020.  You should have a 1098 from your mortgage lender that shows this information.  Lenders send these in January/early February.

[AsYouWish83]

Thank you both so much !

Awesome information!

[xmasbaby0]

Best Wishes!

[Opus 17]

Note that if you do list deductions to itemize, you can only deduct the part of the expenses that each of you actually pays.  A married couple, if filing separately, has some freedom to allocate the deduction to one spouse or the other.  An unmarried couple does not have that freedom, you can only list as deductions, the expenses you actually pay for.  If paid from a joint account, you have to figure out how much each person put into the account.  

[AsYouWish83]

Thank you Opus that was my big question right there.  Right now we have one bank account paying for everything and we each pay half.  So when both filing separate we have to just claim the half we paid right?  I didn't think we could both claim the total, that would be wrong and we'd end up owing haha.

[Opus 17]

Correct.  You can’t claim more than the total, and since you aren’t married, each person can only claim the expenses they actually pay.  

[Critter-3]

Ok ... listen up ... until you are married you will each file as single and only claim the amounts you paid not to exceed 100% of the actual expense.   

HOWEVER  smart people set it up so that ONE person pays the mortgage and RE taxes so that person can itemize deductions and the other takes the standard deduction ... doing it this way gets the best bang for the buck.   Have the other person pay the utilities & insurance, groceries to balance the books if you are really keeping score.   Putting both paychecks into a joint account also works.   AND the person with the higher income usually benefits most from itemizing.  

[Carl]

the person with the higher income usually benefits most from itemizing.

that is absolutely true. However, the likelihood that a single person (especially with no kids) will have enough itemized deductions to exceed their standard deduction, are not all that great.