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mcavenia
New Member

The new energy tax credit of 30% for installing an electrical heat pump including labor costs. To maximize the credit, my wife and I file separately? Is this a thing?

We have 2 heat pump systems that need to be replaced. Max credit is $2000. With each system, it makes sense that we purchase them individually and then file separately to both use our $2000 non refundable income credit.
3 Replies

The new energy tax credit of 30% for installing an electrical heat pump including labor costs. To maximize the credit, my wife and I file separately? Is this a thing?

while doable, it is often not that simple as there are a number of pitfalls of filing Separate. The only way to know is to do your taxes both ways and see whether there is a benefit.  

 

https://turbotax.intuit.com/tax-tips/marriage/should-you-and-your-spouse-file-taxes-jointly-or-separ...

 

 

The new energy tax credit of 30% for installing an electrical heat pump including labor costs. To maximize the credit, my wife and I file separately? Is this a thing?

It is not easy to compare MFJ to MFS using online TT but you can do it.  Since you only get one return for each account and user ID, you have to use 3 accounts and user ID’s—one for MFJ and two for each of the MFS returns.  Compare, choose, and file—and pay—accordingly.

 

It is much easier to do this comparison using the desktop version of TT installed from a CD or downloaded to your own computer.  You pay once for the software and you can prepare multiple returns easily, and it has a “what if” feature that allows comparisons.

 

You are focusing on one specific credit, but you need to be aware of the possible disadvantages of filing separate returns, and there are several disadvantages, especially if you have children, but even if you do not have children.

 

If you were legally married at the end of 2022 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 $25,900 (+$1400 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.

 

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...

 

 

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**

The new energy tax credit of 30% for installing an electrical heat pump including labor costs. To maximize the credit, my wife and I file separately? Is this a thing?

this website is quite accurate and can be used to assess MFS vs. MFJ.  it's already set for 2023. 

 

https://www.dinkytown.net/java/1040-tax-calculator.html

 

also, be mindful that once you file MFJ and the tax filing deadline passes, you can NOT go back and amend to file Separate.  However, if you file Separate and later want to amend to file Joint, that is permitted. 

 

 

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