Tax Benefit for Marrired Couple Living Separately

As an Ohio tax preparer, I get to prepare many many MFS returns in order to save on tax. Most of the savings are from the Oio incometax returns, but there are certainly situations where MFS saves on the federal return. A few quick examples that come to mind:

1) Any of the AGI limiting deductions are not so limited when lowering AGI by filing MFS. These include Sch A Medical, Miscllaneous and casualty loss. 2) To a degree, the amount of Social security that is taxed can be reduced when filing MFS and not living together.

1. Couples claiming child tax credit could be above the child tax credit cutoff but at least one could come in under when filing MFS.
2. Is the million of principal for mortgage interest cut in half when filing MFS? I don't remember. If not, then an advantage here.

-- ArtKamlet at a o l dot c o m Columbus OH K2PZH

It's not the mortgage or RE taxes - you can deduct interest on two houses and taxes on an unlimited number of properties. Are any children involved? Maybe they are both filing HoH with EIC, the same as they did before they were married. That could easily be $7,000 better than MFJ.

-- Don EA in Upstate NY

No. Even if MFJ, they can deduct mortgage interest on up to two residences and real estate taxes on all property, if they have enough total deductions to itemize. But you said they were *living* separately, you didn't say whether or not they were *filing* separately. Spouses do not have to live under the same roof in order to file jointly. The exact number of $7K sounds a little suspect, and quite large, as the amount of a federal credit. What state do they live in? For example, in California there is a $7,000 homestead exemption which lowers the annual property tax bill by roughly $70/year, maybe they got two of these instead of just one. However the second $70/year savings would hardly offset the ongoing expenses of home ownership for a second home. From a pure financial point of view (all costs including federal income taxes), they probably would have been much further ahead by sharing housing costs under one roof and either selling or renting the second residence. The saying "two can live more cheaply than one" only applies if they live together.

-Mark Bole

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Thanks for the info, but I was asking about a tax deduction specifically tied to two residences for married people each owning their own homes.

-- Vic Roberts Replace xxx with vdr in e-mail address.

I'll write it off to head over heels love that makes them so silly. Don't disturb them with the fact that that $7,000 probably cost them at least $20,000, perhaps more if they'd had the sense to rent one of them out.

You're right except for the part about a vacation home. You're allowed to deduct property taxes regardless of the number of homes and mortgage interest on two. Filing status doesn't matter, although both have to use the same deduction method (itemized/standard) if they file separately.

-- Phil Marti Clarksburg, MD

EIC is not permitted on a filing status of MFS.

-Crystal

Right - that's why I said HoH.

Don

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No children living with them as far as I know. I believe all their children are adults and out on their own.

-- Vic Roberts Replace xxx with vdr in e-mail address.

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They live in New York.

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Thanks to everyone for your answers. I guess this will remain one of those mysteries of life :-)

-- Vic Roberts Replace xxx with vdr in e-mail address.