Mortgage Interest Deduction Limits When Filing MFS - Confused About $375k Threshold

Thanks so much! So just to double check - even though our total mortgage is over $375k ($560k total), since we're each only claiming half of it ($280k each), we're both under the individual limits and can claim our full portion of the interest? That makes sense but I wanted to be 100% sure. Also, does it matter that my income is higher than my wife's? We both contribute to the joint account but not exactly 50/50 because of our income difference.

That's exactly right! Since you're each claiming only half of the mortgage ($280k each), you're both well under the $375k individual limit for MFS filers, so you can each deduct your full portion of the interest. Regarding the unequal contributions to the joint account, that could potentially matter. The IRS generally wants to see the mortgage interest deduction split according to legal ownership and economic burden. If you're both on the mortgage and deed equally (50/50), then splitting it that way makes sense regardless of who contributed what to the payments. But if one spouse contributed significantly more to the payments, you might consider adjusting the split to reflect the economic reality of who paid what. Just make sure you can document your reasoning if questioned.

Does this tool work if my wife and I have two different mortgages? We file MFS and have our primary home (jointly owned) plus I have a rental property from before we got married. Would it handle that complexity?

I'm a bit skeptical about these online tools. How does it actually verify the IRS rules? Did you still have to double-check everything yourself? I've been burned before by tax software that seemed to give me the wrong guidance for MFS situations.

For separate mortgages, yes it absolutely handles that! The tool lets you upload documents for multiple properties and it will sort out which deductions apply to which property and how they should be allocated between spouses when filing MFS. I was skeptical too at first! What convinced me was that it actually shows you the specific IRS rules and publications that apply to your situation, with links to the official sources. It's much more transparent than regular tax software. I did double-check a couple things with the IRS website, and everything matched up perfectly.

Wait, what? How exactly does this service work? Is it just some kind of fancy auto-dialer that keeps calling the IRS for you? I thought those weren't allowed.

I call BS. No way you got through to the IRS in 20 minutes. I've been trying for WEEKS. And when I do get through, they just transfer me to different departments where I wait on hold again. If this actually worked, everyone would be using it.

It's not an auto-dialer - it's a completely legitimate service that holds your place in line with the IRS. Basically, they call and wait on hold so you don't have to, then when they reach a human, they connect you to the call. It's all above board and saves you from wasting hours listening to hold music. It absolutely does work. I was skeptical too until I tried it. The reason everyone doesn't use it is because most people don't know about it. I found out about it from my tax preparer who recommended it to several clients with complicated questions that needed direct IRS input. There's no magic - they just wait on hold so you don't have to, and you only pay if they successfully connect you to an agent.

Oh I didn't know about both spouses having to itemize! That actually works in our favor since we were both planning to itemize anyway. But what about property taxes? Do we split those 50/50 too or can one of us claim all of it?

You'll generally want to split property taxes the same way as the mortgage interest (50/50 in your case). You want to be consistent with how you're dividing the expenses related to the home. Remember that with the SALT cap for state and local taxes (including property taxes), each MFS filer is limited to $5,000 in deductions (compared to $10,000 for MFJ). So if your property taxes are high, you might hit that cap pretty quickly, especially if you also have state income taxes to deduct.

This is really important advice! We did the same calculation and found MFS was costing us about $2,500 more in taxes to save $1,900 in student loan payments. Plus MFS made us ineligible for some credits. Definitely worth running both scenarios.

Thanks for the clear explanation! I'm new to this community and dealing with a similar MFS situation. Just wanted to confirm - when you say we need to be consistent with splitting home-related expenses, does that include things like mortgage insurance (PMI) and HOA fees too? Or is it mainly just the mortgage interest and property taxes? Also, do we need any special documentation to show the IRS how we decided to split things 50/50, or is it enough to just be consistent across both returns?