Married Filing Separately

[blakewood]

Hello, my wife has started a new job in a different state and received a substantial increase in salary.  We've been advised to file our taxes separately for 2024 and 2025, until our family has moved to the other state.  I have two questions: 

1) She will have the higher salary, so should she claim our dependents on her return?

2) Should I adjust my W-4 for exemptions or other items, and should I increase my withholding?

[marctu]

Thank you for the question.   Keep in mind that there are several disadvantages to filing Married Filing Separately ("MFS")a.  They include:

• Not being able to take a deduction for student loan interest. 
• Typically being limited to a smaller IRA contribution deduction. 
• Being disqualified from several tax credits and benefits available to those married filing jointly, which include the Child and Dependent Care Credit.
• Both spouses will either need to both itemize or use the standard deduction. They cannot choose different methods.

I can understand why it has been suggested to file as MFS if you are in different states though.  It would in most cases make the state filings easier.   There are states that allow you to file Married Filing Jointly Federal and MFS in the State (Kentucky and Virginia come to mind.) though this would require you to use Turbo Tax Desktop.

Generally the spouse with the higher income should claim the Child Tax Credits.  If your spouse is claiming the credits in Part 3, you should remove any credits from your Part 3.  You would both want to change Part 1 to Married filing MFS as well.  

[blakewood]

Thank you, that's very helpful.  I've also received a raise in salary this year, should I adjust my withholding on my W-4 since my wife and I may be changing our filing status?

[marctu · Accepted solution]

Maybe is the best answer.  I would use the TurboTax's W-4 Calculator for the best result.   If you want to potentially overshoot then go for it, but getting a more refined answer requires using a calculator.

[blakewood]

Thanks very much, I appreciate the insight and help!

[marctu]

You are welcome @blakewood Best wishes to your family in adjusting to this new and exciting opportunity.