Spouse In Nursing Home

[SIF1948]

All of her income (i.e., Social Security and Pensions) are payable to the nursing home.  Currently theses benefits are sent to us and then I send money to the nursing home.  We currently file jointly which will allow me to take the medical deduction.  

Is it prudent to have her income sent directly to the nursing home and then we file separately?  My understanding is that since she will no longer have income she will not have to file a return at all?

[ColeenD3]

The rule reads that if you live together even one day of the year, 100% of her social security becomes taxable with the MFS status. If you think that is a possibility, then stay filing jointly.

[SIF1948]

Thank you for your quick response.

We did not live together at all in 2020.  Is it more advantageous to file MFJ to another status?

[ToddL99 · Accepted solution]

It is almost always more advantageous to file Married, Jointly than Married, Separately. You do not have to live together to file jointly.

See: Is it better for a married couple to file jointly or separately?

Even if payments go directly to the nursing home, your wife will have to file a tax return - it is still her income even if the nursing home has a claim on it for her care.

Filing separately does not change your wife's income. As @ColeenD3 states above, filing separately will actually increase how much of her SS payments are taxable.