In divorce, How do we file seperated, with 2 houses.

[frankbg68]

My wife and I separated 6/24/21. Divorce is still not final as of 10/2022. She moved into our other house which had been rented 01/01/21 to 04/30/21 (converted from personal to rental in may 2019) and now I was trying to do 2021 taxes filing single for both of us, and wanted to convert the house started out as rental to personal use, I saw no option for that. I was working on returns for both of us as single, where we could each use the houses we are in for mortgage interest deductions.

Should we be filing Married jointly, or Married Separately, or Single?

How do we do the Interest deductions for the house she moved into, which WAS rented out at the first part of the year?

Thanks, Frank

[Bsch4477]

You can’t file single. Jointly is almost always the more advantageous filing status and is less complicated. 

[frankbg68]

OK, good to know, I was hoping we could BOTH get to the 10000 limit on deducting mortgage interest that way. Guess not.

Thanks, Frank

[rjs]

As of December 31, 2021, were you "legally separated under a divorce or separate maintenance decree" or did you just decide to live separately?

Do you have any dependent children? If so, where did the children live after June 24?

If you were not legally separated, with a court decree, you are still considered married for 2021. That means that you cannot file as single. You have to file as either married filing jointly or married filing separately. However, since you lived apart for the last 6 months of the year, if you have a dependent child, the parent that the child lived with for more than half the year might be able to file as head of household. TurboTax will guide you through these choices if you carefully answer the questions in the personal information section of the TurboTax interview.

There is no $10,000 limit on mortgage interest. Are you thinking of the $10,000 limit on the deduction for state and local taxes? That gets cut to $5,000 each if you file as married filing separately. Also note that if you file as married filing separately you must either both itemize deductions or both take the standard deduction.

[rjs]

If you were "legally separated under a divorce or separate maintenance decree" as of December 31, 2021, then you can both file as single. If one of you had a dependent child living with you for more than half of 2021, the one with the child could probably file as head of household, which would be more advantageous than single.