How do both of us itemize if only one person is claiming the mortgage interest?
by Mortgage Rates on Saturday, November 6th, 2010 | 4 Comments
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One of you is SCREWED. MFS will cost you big time. Another consequence of your past hurting your present.
Because you probably don’t have enough to really itemize, but are required to do so. That’s why it’s BETTER to file MFJ with Injured Spouse allocation, itemizing. Don’t forget the real estate taxes, also.
Take a look at Schedule A, see what deductions you have, but I bet they don’t come anywhere near the standard deduction, so you will have higher taxable income and pay more tax.. So if you’re set on filing MFS, then see which hurts less, both itemizing or not itemizing. If not itemizing you will lose the benefit of mortgage interest, but can still get some benefit from real estate tax paid.
If the other spouse has no itemized deductions, then the entry on line 40 of their Form 1040 is $0.
If injured spouse didn’t help and you both had income and taxes withheld, you must be from CA, LA or ID. The CP laws in those states allow creditors to attach all community income for debts of either spouse that predate the marriage.
1. Technically, your understanding is incorrect. If either of you itemizes, then the other is not allowed to claim the standard deduction. However, no one is required to claim any deduction. Usually, either both spouses itemize or both spouses claim the standard deduction. However, another option is for one (or both) spouses to do neither. In either words, one person either itemizes or claims the standard deduction and the other claims no deduction.
2. If one spouse itemizes and the other does not claim ANY itemized deductions, then the spouse who is not claiming the itemized deduction puts ZERO ($0.00). If the spouse who is not claiming the mortgage interest wishes, then that spouse may claim other itemized deductions (real estate taxes, either state income tax or sales tax, employee business expenses, theft losses, etc.) and claim the total of those deductions. If the spouse who is not claiming the mortgage interest does not wish to claim any itemized deductions, then that spouse must put zero.
3. It may be illegal for one spouse to claim the entire $7,000 if filing separately. Generally speaking, each person who files separately must claim no more than either the amount paid by that person or the amount owed by that person, whichever is less. Claiming the entire amount on one return is usually allowed only if either (a) only that person owed or paid the interest, or (b) you file jointly.
The other one might be able to claim state and local income tax they paid. Otherwise, they’d put zero for deductions.