Hello,
My wife and I are considering filing separately. We would like to know what benefits we might lose as a result.
AGI: approx $98,000 (me: $68,000; her: $30,000)
Filing jointly taxable income: approx $69,000
Deductions
-$7,000 for state and local income taxes
-$3,000 in real estate taxes
-$7,000 in mortgage interest
Exemptions
-$11,850 (wife, kid, me)
Credits
-$600 credit for child care expenses
-$1,700 education credit (wife school)
-$1,000 child tax credit.
These are pretty much everything that reduced our tax liability. I don't see why we would lose any of this filing separately. I found a TurboTax link that said we'd lose the child tax credit. However, another link said you can still get the credit if filing separately and your AGI is < $55,000.
My wife's AGI is under $55,000, so it seems she could claim my son as an exemption and get the child tax credit and credit for child care. I don't see why she would lose her education credit if she filed separately.
So we should be able to get the $11,850 in exemptions. Wife should cover the credits. I pay the real estate taxes and mortgage, and I don't see why filing separately or jointly would affect that. Same for state versus local taxes.
Am I missing something? I don't see that we would take any major hit from filing separately. The brackets are not as favorable, but if I kept my deductions, my AGI would be in the low 50s.
Anyway, I'm blabbing now. To summarize:
A) Is there any reason to believe we would lose any of the above deductions?
B) Is there any reason to believe we wouldn't get our 3 exemptions?
C) Is there any reason to believe we wouldn't get the same tax credits?
D) Are the less favorable brackets pretty much the only thing that would hurt us?
Thank you!