I worked a full time and part time job forcing us into a higher tax bracket together... should we file separately to maximize our return?
The answer is simple. If you file as Married Filing Separately, you do NOT qualify for the EIC at all. EIC is specifically prohibited if you file as Married Filing Separately.
See IRS Pub. 501
The Married Filing Separately filing status is very different than the Single filing status. There are a number of severe restrictions on deductions and credits, and on the amount of IRA contributions that you can deduct, especially if you live together with your spouse.
You can not take the EIC,
You can not take the credit for Child and Dependent Care, in most cases,
You can not take the Education credits/deductions, and there are many other restrictions.
If either of you receive Social Security benefits and you live with your spouse, more of the SS benefit will be taxable, and the person receiving it will have to include the SS benefit in their gross income when determining whether they have to file. If one of you itemizes deductions, the other must also itemize even if they have nothing to itemize.
Before you decide, you should carefully read the restrictions that go with MFS in IRS Pub. 501, at this link:
http://www.irs.gov/pub/irs-pdf/p501.pdf
You should carefully read the limits on IRA deductions in IRS Pub. 590-A at this link:
http://www.irs.gov/pub/irs-pdf/p590a.pdf
In addition, if you live in a Community Property state, there are special rules you must follow for reporting income and expense. For further information on that, see IRS Pub. 555, at this link:
http://www.irs.gov/pub/irs-pdf/p555.pdf
and/or the Turbotax FAQ at this link:
https://ttlc.intuit.com/questions/1901162-married-filing-separately-in-community-property-states
The answer is simple. If you file as Married Filing Separately, you do NOT qualify for the EIC at all. EIC is specifically prohibited if you file as Married Filing Separately.
See IRS Pub. 501
The Married Filing Separately filing status is very different than the Single filing status. There are a number of severe restrictions on deductions and credits, and on the amount of IRA contributions that you can deduct, especially if you live together with your spouse.
You can not take the EIC,
You can not take the credit for Child and Dependent Care, in most cases,
You can not take the Education credits/deductions, and there are many other restrictions.
If either of you receive Social Security benefits and you live with your spouse, more of the SS benefit will be taxable, and the person receiving it will have to include the SS benefit in their gross income when determining whether they have to file. If one of you itemizes deductions, the other must also itemize even if they have nothing to itemize.
Before you decide, you should carefully read the restrictions that go with MFS in IRS Pub. 501, at this link:
http://www.irs.gov/pub/irs-pdf/p501.pdf
You should carefully read the limits on IRA deductions in IRS Pub. 590-A at this link:
http://www.irs.gov/pub/irs-pdf/p590a.pdf
In addition, if you live in a Community Property state, there are special rules you must follow for reporting income and expense. For further information on that, see IRS Pub. 555, at this link:
http://www.irs.gov/pub/irs-pdf/p555.pdf
and/or the Turbotax FAQ at this link:
https://ttlc.intuit.com/questions/1901162-married-filing-separately-in-community-property-states