This post has been closed and is not open for comments or answers.

Should I file "married filing separately"?

I filed last year "married filing jointly", and bought a house under my name in 2011.  When trying to file "mfj" this year, the mortgage deductions did not affect my refund meter.  I made $40,500, my husband $13,400, we have no kids.  Would filing "married filing seperately" and itimizing our deductions, like my mortgage, give us more of a refund?
    You have the same standard deduction to overcome before your mortgage deduction will do you any good whether you file MFJ or MFS. That's why congress wrote a rule saying one of you can't take the std while the other itemizes.
    There are no advantages to filing MFS. For every scenario that you can think of to manipulate the system, congress wrote a rule against it. See the above example! People usually only file separately for personal reasons, separation of finances. If both high income spouses have approximately the same income, the tax brackets will occasionally slightly favor MFS. The only way to be sure is prepare your taxes both ways & compare. There is one notable exception: Ohio. The state tax system is so convoluted that Married couple have to check both ways.
    If you choose married filing separately as your filing status, the following special rules apply. Because of these special rules, you will usually pay more tax on a separate return than if you used another filing status that you qualify for.

    1. Your tax rate generally will be higher than it would be on a joint return.
    2. Your exemption amount for figuring the alternative minimum tax will be half that allowed to a joint return filer.
    3. You cannot take the credit for child and dependent care expenses in most cases, and the amount that you can exclude from income under an employer's dependent care assistance program is limited to $2,500 (instead of $5,000 if you filed a joint return). For more information about these expenses, the credit, and the exclusion see Pub 17, Chapter 32.
    4. You cannot take the earned income credit.
    5. You cannot take the exclusion or credit for adoption expenses in most cases.
    6. You cannot take the education credits (the American Opportunity credit and the lifetime learning credit), the deduction for student loan interest, or the tuition and fees deduction.
    7. You cannot exclude any interest income from qualified U.S. savings bonds that you used for higher education expenses.
    8. If you lived with your spouse at any time during the tax year:
    a. You cannot claim the credit for the elderly or the disabled,
    b. You will have to include in income more (up to 85%) of any social security or equivalent railroad retirement benefits you received, and
    c. You cannot convert amounts from a traditional IRA into a Roth IRA.
    9. The following deductions and credits are reduced at income levels that are half those for a joint return:
    a. The child tax credit,
    b. The retirement savings contributions credit,
    c. Itemized deductions, and
    d. The deduction for personal exemptions.
    10. Your capital loss deduction limit is $1,500 (instead of $3,000 if you filed a joint return).
    11. If your spouse itemizes deductions, you cannot claim the standard deduction. If you can claim the standard deduction, your basic standard deduction is half the amount allowed on a joint return.

    You may not be able to deduct all or part of your contributions to a traditional IRA if you or your spouse were covered by an employee retirement plan at work during the year. Your deduction is reduced or eliminated if your income is more than a certain amount. This amount is much lower for married individuals who file separately and lived together at any time during the year.

    If you actively participated in a passive rental real estate activity that produced a loss, you generally can deduct the loss from your non-passive income, up to $25,000. This is called a special allowance. However, married persons filing separate returns who lived together at any time during the year cannot claim this special allowance. Married persons filing separate returns who lived apart at all times during the year are each allowed a $12,500 maximum special allowance for losses from passive real estate activities.
      NO. In particular, one of you cannot use the standard deduction while the other itemizes deductions. It's one way or the other for both of you, if you file separate. You will still come out best MFJ
      • The rule for MFS is that both spouses must itemize.  You would have to split your itemized deductions up using any "reasonable method."
      • So if we both itemized our deductions, we wouldn't get a better refund?  I would think that, since the mortgage deduction didn't affect the refund meter by filing jointly, it may affect it positively if filing separate.  What, if any, are the advantages of filing separately then?