Can someone help me with a question I have? I am preparing my taxes and my husband took a loan from his 401K last year. I filled out our return as married filing jointly first and then tried it as married filing separately to see if there would be a difference in what we owed. When we filed jointly and itemized our deductions it didn't help us because the standard deduction ended up being more than the itemized amount. When I filed separately with my husband itemizing he ended up benefiting from itemizing. My question is...if we file separately and our tax liability is lower can we still claim each other as an exemption on our separate returns? So rather than having 1 exemption we each would have 2 exemptions.

No, you may not use each other as exemptions if you are filing seperately.

You each are already claiming yourself on your tax forms, and one person can not be claimed twice.

A careful reading of IRS Publication 501 is recommended.

"If you file a separate return, you can claim the exemption for your spouse only if your spouse had no gross income, is not filing a return, and was not the dependent of another taxpayer."

Because you also addressed the matter of standard deductions, when filing separately please also note:

"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."

quote:

Originally posted by coldfuse:
A careful reading of IRS Publication 501 is recommended.

"If you file a separate return, you can claim the exemption for your spouse only if your spouse had no gross income, is not filing a return, and was not the dependent of another taxpayer."

Because you also addressed the matter of standard deductions, when filing separately please also note:

"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."

Thank you for your reply and I did read over the Publication that you mentioned above. It was very helpful but I'm confused by what it says about if my spouse itemizes then I can't take the standard deduction. On the tax form the choices are Single or Married filing separately, $5,450 or Married filing jointly or Qualifying widow(er), $10,900. So if my spouse itemizes I can't take the Single or Married filing separately, $5,450 deduction? It is exactly half the amount of the Married filing jointly deduction of $10,900. If I can't take that deduction then what do I take? Can you please clarify?

You can only take the married filing separately deduction if you spouse does the same. If one of you itemizes, this deduction is no longer available. You can, however, itemize any remaining deductions that were your expenses not appearing on your spouse's return (property tax on a car owned by you, for example).

Yes, I agree with you.