Newly married, but not sure on if we should file together or not

[edmoiler13]

My wife and finally married after many years together.  As the house(in michigan) is only in my name and her child is hers, I thought we would just continue to do our taxes separately, however I'm not certain how that would work as I'm pretty sure we both would need to itemize and it says only one of us can.  If we file together, how does that all work with the mortgage interest for me and her child for her?  Also I make significantly more than she does and she got stimulus money, while I never got a penny because of my income.  Combining our incomes will negate her then from anything based on 2020 tax returns.  Need some advice on how to do this properly. thanks

[VolvoGirl]

File a Joint return.  You can claim her child on it and all your deductions.  If you file Married filing Separate it doesn't mean only one person can Itemize.  Actually the opposite.  If one person itemizes then the other spouse must also itemize even if it is less than the Standard Deduction.

Unless you have a specific reason to file separate returns,

It is usually better to file Joint. Joint has the lowest tax rates and the highest Standard Deduction.   And if you are in a Community Property state MFS gets tricky to figure out.  Here's some things to consider about filing separately……

In the first place you each have to file a separate return, so that's two returns.  And if you are using the Online version that means using 2 accounts and paying the fees twice.  

Many people think they come out better when filing Married Filing Separate but they are probably doing it wrong.  If one person itemizes deductions then the other one must itemize too, even if it's less than the standard deduction, even if it is ZERO!  

And there are several credits you can't take when filing separately, like the

EITC Earned Income Tax Credit

Child Care Credit

Educational Deductions and Credits

And contributions to IRA and ROTH IRA are limited when you file MFS.

Also if you file Married Filing Separately up to 85`% of your Social Security becomes taxable right away even with zero other income.

See …….

https://ttlc.intuit.com/community/married/help/is-it-better-for-a-married-couple-to-file-jointly-or-...

[edmoiler13]

When I started my return today, it said only one of us could itemize however on turbotax and the other would tax the standard deduction.  current income levels would put her in the standard deduction, but mine would be over due to the house interest.  If we combine, then we are under the combined standard deduction, and then I really don't seem to get any credit for all of my mortgage interest then.

Lastly, you mentioned special circumstances.  She had identify theft in the past and requires a IRS generated PIN when she files, so how does play into things?  My concern was keeping it so she could continue to get covid related stimulus money moving forward since I'm getting nothing currently and if we combine incomes, then she gets nothing for herself or her child

[VolvoGirl]

Can you post a screen shot that says only one of you can itemize?

[edmoiler13]

you're correct, I read that wrong.  So hypothetically speaking, I file on my own and everything goes like it has for years, but she really only has her one child to take a tax credit for, will she still get that since she won't have anything to else to write off so she will lose the standard deduction entirely other than her child credit, correct?

[VolvoGirl]

No, She loses the Child Tax Credit and EIC so file Joint.  If you file Joint that is one return for the both of you.  She won't file her own return.  

[DanielV01 · Accepted solution]

@edmoiler13.  She would still get the Child Tax Credit filing Married Filing Separately.  But she can't claim EITC or Dependent Care Credit (babysitting).  Where you will benefit is that filing joint will put you in much more favorable income tax brackets, particularly since your income is apparently much higher than hers.  You will see that your combined result for filing joint will almost certainly be greater refund (or less overall due) than the combined result of filing separately.

You are not required to file jointly.  Many have compelling reasons for filing separately even though filing joint provides a greater tax benefit.  But if those factors don't exist, you will undoubtedly see a greater benefit (and simpler tax filing) for filing a joint instead of a separate return.