Thanks for adding that context! Yes, that's exactly why I'm doing MFS - to keep my income-based payments manageable. I've done the math and even with losing some tax benefits, the monthly payment reduction over the year saves me more. Do you know if using TurboTax makes it easy to compare both scenarios before finalizing?

Yes, TurboTax makes it fairly easy to compare both scenarios. You can actually prepare your return both ways (filing jointly and filing separately) before you file to see the difference in tax liability. The software has a feature called "What If" scenarios where you can see how different choices affect your refund. You might need the Deluxe version or higher to access this, but it's worth it for your situation. Just remember to look at the total annual impact - combining both the tax difference and the student loan payment savings over 12 months to determine which filing status truly benefits you more.

Yeah, this is important! The tax penalties for MFS can be significant. You lose the student loan interest deduction, education credits, child and dependent care credit, and often have lower income thresholds for deductions and credits. Plus, if one spouse itemizes, the other MUST itemize too, even if taking the standard deduction would be better.

This is super helpful advice. You can get the wage and income transcript online through the IRS website if you set up an account. I had to do this when I lost my 1099s from 2020 while moving.

I hadn't considered quarterly payments! How complicated is it to calculate how much you should pay each quarter? And do you have to worry about underpayment penalties if you don't pay enough?

The basic calculation isn't too hard - you need to pay either 90% of this year's taxes or 100% of last year's tax liability (110% if your income is over a certain threshold). Most people go with the 100% of last year's taxes since that's easier to calculate. You divide that annual amount by 4 and make equal payments on the quarterly due dates (April 15, June 15, September 15, and January 15 of the following year). The IRS has a form 1040-ES with worksheets to help you calculate. Regarding underpayment penalties - as long as you hit that 90%/100% threshold by the end of the year AND make the payments by the quarterly due dates, you're good. If your income is very seasonal, there's also an "annualized income" method that might help you avoid penalties if your income isn't earned evenly throughout the year.

This is a really good point. I was withholding an extra $300 per check until my accountant showed me how to properly fill out the new W-4. Now my regular withholding is almost perfect without any extra withholding. The key was accurately completing Step 2 for multiple jobs.

Would filing a police report actually help speed up the resolution with the IRS? And should I file it in my local jurisdiction even if I have no idea where the identity theft occurred?

Filing a police report won't necessarily speed up the IRS process, but it creates an official record of the crime that strengthens your case with both the IRS and credit bureaus. It demonstrates you're taking legal steps to address the fraud, which can be important if there are any questions about the legitimacy of your claim. Yes, file the report with your local police department where you live. They understand that identity theft can happen anywhere, and they're required to take the report even if the actual crime might have occurred elsewhere. Ask for a copy of the report or at minimum the report number to include with your IRS documentation.

You definitely need to contact your state tax agency separately! I made the mistake of thinking the IRS would handle everything, but states have their own identity theft processes. When I finally contacted my state revenue department, I found out someone had also filed a fraudulent state return in my name and I had to go through a whole separate verification process.

Thanks for letting me know! I'll contact my state tax department right away. Did you need to submit the same documentation to them that you did to the IRS, or do they have different requirements?

That's a really smart point I hadn't considered. We're doing great, but I guess it makes sense to document everything properly regardless. Better to have clear boundaries even when things are good. Did you just write up something informal or did you use a specific format for your agreement?

We didn't have anything formal which is why it became a problem. What I recommend now (after learning the hard way) is a simple document that states: 1) Both parties' names and the property address, 2) The tax year it applies to, 3) The specific percentage split of mortgage interest and property tax deductions, 4) A statement that both parties understand this arrangement and won't claim more than their agreed portion, and 5) Both signatures and the date. It doesn't need to be notarized or anything fancy - just having something in writing helps prevent misunderstandings. You could even email it to each other so there's a digital timestamp. Some couples renew this agreement each tax year if their financial contributions change.

Smart move with the separate account. I was wondering though - does it matter who actually transfers the money to the mortgage company? Like if the payment comes from a joint account but one person set up the automatic payment, does the IRS care about that detail?