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creedhayes
New Member

My wife and I have a combined income of $160,000, with our new baby would it be better to file married seperate so we can get a tax credit for the baby?

 
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xmasbaby0
Level 15

My wife and I have a combined income of $160,000, with our new baby would it be better to file married seperate so we can get a tax credit for the baby?

No, because you lose certain credits if you file separately.  Make sure you say the baby born in 2015 lived with you all year.  You can say that for newborns.

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 each receive the $4000 personal exemption, plus the married filing jointly standard deduction of $12,600 (add $1250 for each spouse over the age of 65).  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, or deductions for student loan interest. A higher percent of your Social Security benefits may be taxable.  In many cases you will not be able to take the child and dependent care credit.  If you live in a community property state, you will be required to provide additional information regarding your spouse’s income.  If you are using online TurboTax to prepare your returns, you will need to prepare two separate returns and pay twice.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**

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2 Replies
xmasbaby0
Level 15

My wife and I have a combined income of $160,000, with our new baby would it be better to file married seperate so we can get a tax credit for the baby?

No, because you lose certain credits if you file separately.  Make sure you say the baby born in 2015 lived with you all year.  You can say that for newborns.

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 each receive the $4000 personal exemption, plus the married filing jointly standard deduction of $12,600 (add $1250 for each spouse over the age of 65).  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, or deductions for student loan interest. A higher percent of your Social Security benefits may be taxable.  In many cases you will not be able to take the child and dependent care credit.  If you live in a community property state, you will be required to provide additional information regarding your spouse’s income.  If you are using online TurboTax to prepare your returns, you will need to prepare two separate returns and pay twice.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
Zbucklyo
Level 9

My wife and I have a combined income of $160,000, with our new baby would it be better to file married seperate so we can get a tax credit for the baby?

No.  The child tax credit phaseout for married filing separately is exactly half of what it is for married filing jointly - starts to phase out at 55K and is entirely phased out at 80K.  So, you say, one of us makes less than 80K, so we will have that parent claim our child as a dependent and for the child tax credit, and then we'll be able to get (at least some of) the child tax credit.  Unfortunately, when there are two people who can claim a child for a dependency, who lived with the child all year, etc., the IRS will give the dependency (and child tax credit) to the parent with the highest AGI.  Since one of you must have an AGI over 80K, that person would be forced to take the child tax credit and dependency exemption, so you would lose the child tax credit anyway.

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