Was she a student in 2022? Is that why her parents still want to claim her? Are they trying to get education credit? If you file married filing jointly she cannot be claimed as a dependent. If you file married filing separately, then she can be claimed as their dependent.
Filing married filing separately is not necessarily great for you----you cannot get earned income credit nor can you get education credits for yourself if you file MFS. And your wife also has to file MFS.
But you can file that way. If you do....when you answer the question in My Info about whether you were married in 2022, say yes. Then when it asks if you want to file together with your spouse, say no. It will ask some information for her like name, SSN, date of birth, and then it will ask if she can be claimed as someone else's dependent --so you will say yes to that.
Before all of you file tax returns maybe you should have a family discussion regarding the pros and cons of the way you are choosing to file.
If you were legally married at the end of 2022 your filing choices are married filing jointly or married filing separately.
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 get the married filing jointly standard deduction of $25,900 (+$1400 for each spouse 65 or older) 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, adoption credits, or deductions for student loan interest. A higher percent of your Social Security benefits may be taxable. Your limit for SALT (state and local taxes and sales tax) will be only $5000 per spouse. In many cases you will not be able to take the child and dependent care credit. The amount you can contribute to a retirement account will be affected. If you live in a community property state, you will be required to provide additional information regarding your spouse’s income. ( Community property states: AZ, CA, ID, LA, NV, NM, TX, WA, WI)
If you are using online TurboTax to prepare your returns, you will need to prepare two separate returns and pay twice.
https://ttlc.intuit.com/questions/1894449-married-filing-jointly-vs-married-filing-separately
https://ttlc.intuit.com/questions/1901162-married-filing-separately-in-community-property-states
https://ttlc.intuit.com/questions/1894449-is-it-better-for-a-married-couple-to-file-jointly-or-separ...
**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.**
