Filing jointly as married or separately if we both own houses?

[kdarbro]

Hi.

My wife and I just got married in 2023 and my wife and I both own houses, although we live in my house. Her son is living in her house.  I occasionally do freelance work, but didn't do any in 2023.

Should we file jointly as married filing together or married but filing separately? If we file as married jointly together, do we claim both houses and interest? She pays her mortgage and utilities for her house for her son, and I pay everything for my house.

I've never been married before, so this is new territory for me, and with two houses, it's new for her as well! Any insight and recommendations are most welcome!

Thanks for considering my question.

[Bsch4477]

Married jointly is almost always better. You report all income and deductions on the same return. 

[xmasbaby0]

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...

[RobertB4444]

You have two houses.  It's not that unusual.  And yes, you can deduct the property taxes and mortgage interest on both houses.  However, the maximum property tax deduction that you are allowed is $10,000 and you are not allowed to deduct mortgage interest on a mortgage over $750,000 so the value of the two houses together may come in to play.

Married filing jointly is almost always the better choice.  When filing as married filing separately there are a number of deductions and credits that are no longer allowed.  You need to consider that when deciding.

Congratulations!

@kdarbro 

[AmyC]

MFJ works for you. When you itemize, you are allowed to claim the mortgage interest on your main home and second home. You can claim all property tax for unlimited homes.

Reference:

How does the Standard Deduction differ from itemizing deductions?

About Schedule A (Form 1040), Itemized Deductions - Internal Revenue Service