Tax Year Prior to 2020: Married filing separately mortgage interest

[SB212]

Do I also split the 'Outstanding Mortgage Principal' (box 2) if splitting the Mortgage Interest Received from Payer (box 1), or does that stay as the full amount listed on the 1098? 

[VictorW9]

If you are splitting the 1098, then it goes for whole 1098. Everything is split including the Principal mortgage in box 2.

[Oofties]

When married filing separately I know you both have to itemize and split mortgage interest, but do HAVE to split the property tax or can just one person claim it?  And what about State tax refund?  Does that need split too?

[JohnB5677]

If you are using the status of Married and Filing Separate you must both claim either the Standard  Deduction ($12,200 not $24,400) or Itemized Deductions.  The IRS does not dictate how to make the allocation.  The exception is if your a community property state.

If your incomes are similar you may want a 50/50 split.  If one spouse's income is significantly higher, you may want to weight more to that side.

[tmkk]

Hi, my partner and I aren't married and we file our taxes separately.  We are buying a house and will both be on the loan and title. We are in California. Can we choose that only one of us deducts the interest? Or can we choose a certain percentage each of us deducts? If so, does it mean that we both will need to itemize or can the other person do the standard deductions if they choose to?

Thank you

[VictoriaD75]

If you are married filing separately and one spouse chooses to itemize, the other must itemize as well regardless of the dollar amount of deductions. One spouse cannot opt for the standard deduction while the other itemizes. You can split mortgage interest and property taxes in any manner you choose, such as 0%/100% or 50%/50%, as long as the total between the two returns does not exceed 100% of the total expense.

There are certain tax implications to this choice. The standard deduction is less for Married Filing Separately ($12,200 in 2019) versus Married Filing Jointly ($24,400 in 2019). Opting for the Married Filing Separately status excludes taxpayers from certain tax credits, such as the Earned Income Credit or education credits.

Finally, California is a community property state. You will have to list your spouse's income, tax liability, withholding, etc. on your return regardless of filing status.

Should You and Your Spouse File Taxes Jointly or Separately?

Married Filing Separately

[tmkk]

@VictoriaD75 hi, we aren't married. What are our options since we aren't married?

[pilotgal8]

Married separate -If the husband  paid ALL the mortgage payments how does he claim credit for that on Schedule A. I don't see where the splitting the credit for thepayments is provided.

[MayaD]

 It is not a credit.  You can itemize deductions or use the standard deduction. Deductions reduce the amount of your taxable income.

Itemized deductions include amounts you paid for state and local income or sales taxes, real estate taxes, personal property taxes, mortgage interest, and disaster losses from a Federally declared disaster. You may also include gifts to charity and part of the amount you paid for medical and dental expenses. 

If the total of the mortgage interest that he will be claiming on his return plus the other itemized deductions exceeds his standard deduction, he will benefit by itemizing on Schedule A (Form 1040)  

TurboTax won't split the deductions automatically, you and your husband will decide how to split the 1098 form in whatever way you both agree upon. You must both claim either the Standard  Deduction or Itemized Deductions.

[Anthonism]

For 2020, the value of the home must be less than $187,500. We are splitting the mortgage interest 50/50, but the value of the property exceeds $187,500. Do we also cut the property value in have in each return or do we put full property value in both returns and only divide interest?

[MaryM428]

You do not divide the value of the property.  Put the full property value in each return and divide only the mortgage interest.  Your outstanding mortgage principle is entered as on the 1098 mortgage interest form.  

In some cases, taxpayers may have a better return if one spouse takes all of the mortgage interest and the other takes the standard deduction. 

[pilotgal8]

Primary tax payer paid ALL mortgage int & taxes. How do I get TT desktop to NOT split these entries from 1098? Do I enter the correct amounts on HIS Schedule A. It seems HE will get credit for ONLY $5,000 real estate tax payment, though he made ALL payments. Assistance please.

[DianeW777]

When expenses are paid from separate funds, expenses are deductible only by the spouse who pays them.

• For example, if otherwise deductible medical expenses are paid from an account owned by one of the spouses or in a community property state from an account that's the separate property of one of the spouses under the laws of that state, only that spouse may claim a deduction for the expenditure.
• FAQ for deductions when the filing status is MFS

When you go through the mortgage interest, entering Form 1098, be sure the questions are answered correctly.  For example, when you come to the question 'Did any of these uncommon situations apply to this loan?' Do NOT select the answer 'Someone co-owns this loan, and I only pay a portion of it.'

• Enter the property taxes here as well, or if they are not paid by the lender through escrow then enter them under Your Home, Property (Real Estate) Taxes.

Community property states may have specific rules so be sure to check to see if you are in one of those states.

[superman23]

Married filing separately - taxpayer and spouse each deduct 50% of mortgage interest. Form 1098 is in spouse's name and SSN only. The program instructs the taxpayer to enter the name (and other information) of the person who received the form 1098 (spouse). The interest then appears on the line for mortgage interest not reported on form 1098 and shows the spouse's information as if she is the person from whom the taxpayer bought the home. This presentation is incorrect. I have not yet tried omitting the spouse's information, as I don't know if that will cause a problem with e-filing. 

Can anyone explain why TurboTax does this? Do you have a solution?

Thanks.

[DaveF1006]

 You wouldn't omit the spouses' information. Also, the lender's name should be other than the spouses name so when it asks for a lender, make sure you put the mortgage lender's name and not your spouse. 

If correctly filled out, you will have a correctly filled out Home Mortgage Worksheet with the lender's name in line 1a, and correctly filled out information in line 11 of the form with the Box checked that says were you and someone else liable for the mortgage and the other person received the 1098.

If line 12 is filled out, then this is incorrect and you may need to go back and check your entries. make sure as you are going through the interview, there will be a screen that says uncommon situations.  Make sure you check the box that says our names are not on the 1098, or neither one of our names is on the 1098. This will then trigger the right questions in order for the information to flow correctly on line 11 of the Home Mortgage Worksheet.

@superman23