married filing separately and standard deduction

[lindamil6449]

Doing taxes for my daughter who has been separately from her husband for around an year, they finally sold home this year , and basically living separate lives. Have not filed for divorce because they are waiting until middle of 2024 and will then be married 10 years (social security benefit requirement). She had been paying most of the mortgage for a year plus she has considerable medical deductions she can claim.  Doing the basic input into turbotax she exceeds the 13850.00 standard deduction for itemizing around 18500.00 .   But I am reading both spouses must itemize if one itemizes.  Her husband would not have much to itemize (maybe some medical bills). So there is no way for him to get the standard deduction and basically have 0 as reducing his taxes. Splitting the mortgage interest/taxes would make both having the standard deduction.   Is there some work around for this?  Please verify i am reading this correctly.  thanks

[xmasbaby0]

No.  There is no workaround for the tax laws.    If they file married filing separately, they are subject to the rules for that filing status.  If one spouse itemizes, the other must also itemize.  Or if one uses standard deduction the other uses standard deduction.  There is not a workaround that allows one of of each.   So....sorry----that is one of the pitfalls of filing MFS.  One spouse might take most or all of the itemized deductions, leaving the other spouse with no deductions to use, and with the prospect of having all of their income taxed.

The only time there is some difference in this is if one of the spouses has had the children for at least six months and can file as Head of Household.   Do they have children?  Who has custody of the children?

[JamesG1]

You are reading correctly.

Is there a dependent child that would allow your daughter to file as a head of household?

You may qualify for Head of Household filing status if you:

• Were unmarried as of December 31, 2023 and
• Paid more than half the cost of keeping up your home during the tax year (rent, mortgage, utilities, etc.), and
• Supported a qualifying person.

If you were legally married as of December 31, 2023 and a child lives with you, you may qualify for Head of Household filing status if:

• You will not be filing jointly with your spouse,
• Your spouse did not live in your home during the last six months of the year,
• Your home was your child's, stepchild's, or foster child's main home for more than half the year, 
• You paid more than half the costs of keeping up your home during the tax year,
• You meet the qualifications to claim the child as your dependent, even if the other (noncustodial) parent is actually claiming the child as a dependent on their return.

Sometimes, things can be worked out between spouses.  For instance, suppose the difference between the husband filing standard deduction and filing itemized is a $300 refund.

For $300 paid up front, the husband might be willing to file claiming itemized deductions allowing your daughter to also file claiming itemized deductions.

@lindamil6449 

[VolvoGirl]

If they both agree they could file a Joint return.  That would have more benefits and a higher standard deduction.  

[Opus 17]

You are correct, and there is no special workaround**.  Either your daughter itemizes, which forces the spouse to itemize even though his deductions are less than the standard deduction (raising his taxes), or she uses the standard deduction so that her spouse can also use the standard deduction, but this raises her taxes.  (The spouse will at least get to deduct his state income taxes.)

The mortgage and property taxes are supposed to be deducted by the person who actually paid them.  If your daughter were to allow her spouse to claim some of the mortgage interest and property taxes (to "even out" the itemized deductions) there is no particular way for the IRS to discover this, except in the unlikely event of an audit (less than 1% chance).  But she's not required to do that, and it could be viewed as improper.  

[lindamil6449]

No children in marriage

[LeticiaF1]

If they learn about the differences between Married Filing Joint and Married Filing Separate, it might be easier for them to decide what status to use.  

What do married filing jointly couples get?

• Largest standard deduction
• Easier to qualify for many credits like, Earned Income Tax Credit, Education Credits, Child and Dependent Care Credit
• Higher income thresholds for certain taxes and deductions

Married Filing Separately?

• Lowest standard deduction
• Automatically disqualified from several of the tax deductions and credits mentioned earlier.
• Smaller IRA contribution deduction.
• Can't take the student loan interest deduction.

For more information see the TurboTax help article How Should You and Your Spouse File Taxes? Married Filing Jointly vs Separately.

@lindamil6449