Should I declare my wife as a dependent?

My income was just over 100K and my wife's gross pay was just over 14K.  Essentially she is a dependent, she works part time... So should I also  file separately or a joint return.  When I was entering in the initial information it stated that with my income, and the 2 children, my expected return was about 5K, not including the the interest that I payed on the mortgage, and taxes, and other deductions.  

When I entered my wife's income and other information, it lowered my return to just over 500 bucks, not including the insurance and taxes and mortgage interest.  

Please help - I'm strapped and seems like I can never get ahead or put money away.  I understand that I am not managing my money as efficiently  as possible, but I am really counting on a good sized return and from what i've already inputted, that doesn't seem like it will be happening this year, however if I would change the filing status to separately, would that be a better scenario?  

Please advise: cmilinowicz@gmail.com

-Chris Milinowicz
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    You cannot claim a spouse as a dependent.  You can, however, receive an exemption for a spouse (whether the spouse has income or not) by filing a joint return - which is the same thing.

    There is no advantage to filing separate returns just because one spouse has income and the other doesn't, one has more income than the other, one has a business and the other doesn't, or because the spouses married during the year.

    The general rules for filing status are that married filing jointly is best, followed by head of household (but only if you qualify), followed by married filing separately, which is usually the worst.

    There are many disadvantages to file as married filing separate.  These include:

    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).
    4. You cannot take the earned income credit.
    5. If one spouse itemizes, the other must itemize.  If no itemized deductions are left, their standard / itemized deduction would be $0.  (This is one of the major disadvantages.)

    And many more provisions that make it undesirable.
       
    There are a few areas, such as Ohio, where filing separately may have an advantage on state returns that offsets any disadvantage on federal returns.

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      Your wife is not a dependent, however, you can file a joint return (meaning that you and your wife file a single tax return for both of you) which will effectively give you a tax benefit for supporting your wife because you can claim 2 exemptions for you and your wife, and 1 exemption for each dependent you have.
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