Should my husband and I file married or separately for better tax benefits?

This is a great question that a lot of newly married couples face! The "married filing jointly" vs "married filing separately" decision really depends on your specific situation. In general, filing jointly typically provides better tax benefits for most couples. You'll usually get a lower tax rate, and you'll be eligible for more deductions and credits that you might lose if filing separately. This includes things like the Earned Income Credit, education credits, and the full student loan interest deduction. However, there are specific situations where filing separately might make sense. The income-based repayment plan for your husband's student loans is a legitimate consideration. Filing separately might keep his reported income lower for the IBR calculation. But you need to calculate whether the student loan payment savings outweigh the tax benefits you'd lose by not filing jointly. For your new home, you can claim mortgage interest deductions regardless of filing status, but the standard deduction for married filing jointly ($29,200 for 2024) is higher than for married filing separately ($14,600 each), so you need to see if your itemized deductions exceed the standard deduction. I'd recommend running your numbers both ways before deciding. TurboTax can actually calculate both scenarios to show you the difference.

I was in almost the exact same situation as you last year! My wife has W-2 income and I'm self-employed with student loans on IBR. We went back and forth on what to do until I found this awesome tool called taxr.ai (https://taxr.ai) that saved me hours of headaches. I uploaded our tax documents and it analyzed both filing options to show us the exact difference in dollars. For us, filing separately would've saved about $180/month on my student loan payments, but we would've lost around $3,200 in tax benefits by not filing jointly. The tool broke everything down clearly - standard deduction differences, lost credits, and even calculated the student loan payment changes. What was really helpful was how it explained the self-employment tax implications - something I totally misunderstood before. There are nuances with the Qualified Business Income deduction that can be affected by your total household income when filing jointly vs separately.

I wanted to follow up about my experience with taxr.ai after being skeptical in my previous comment. I decided to give it a try since we were really struggling with the filing status decision too. I was genuinely surprised by how thorough it was! It identified that my husband's self-employment income would benefit from a specific retirement account strategy that would work better under joint filing. It also calculated exactly how our rental property depreciation schedule would work under both scenarios. The analysis showed we'd save about $4,300 by filing jointly despite my initial assumption that separate would be better. The document review feature caught a 1099 mistake I hadn't even noticed. Not saying it replaces a CPA for super complex situations, but it definitely exceeded my expectations and gave us clarity on the married filing jointly vs separately question.

If you're dealing with student loans on IBR and trying to figure out the filing status impact, you might also run into issues trying to contact the loan servicer or even the IRS for clarification. I spent WEEKS trying to get through to my loan servicer last year to understand how my IBR calculation would change. I ended up using Claimyr (https://claimyr.com) to actually get through to a human at both the loan servicer and later the IRS. They have this service that basically navigates the phone trees and waits on hold for you, then calls you when a real person is on the line. You can see how it works here: https://youtu.be/_kiP6q8DX5c For the student loan question specifically, I found out that my loan servicer could give me a precise calculation of how filing separately would affect my monthly payment, which helped us make the final decision. The IRS agent I spoke with also clarified some questions about business expense deductions that weren't clear from the website.

I have to eat my words from my skeptical comment earlier. After getting frustrated with another failed attempt to reach the IRS about how filing status would affect our situation, I broke down and tried Claimyr. Within 35 minutes they had me connected to an actual IRS representative who answered my specific questions about how the self-employment tax works when filing separately vs jointly. The agent explained that while filing separately might help with the student loan payments, we would lose several valuable tax credits. Based on that conversation, we ran the numbers and discovered we'd save about $3,800 by filing jointly despite the increase in student loan payments. Without getting that clarification, we might have made the wrong choice. Honestly shocked this service actually worked - saved me hours of frustration.

Don't forget to consider state taxes too! My husband and I found that while federal taxes were better filing jointly, our state (California) had some weird quirks that made filing separately slightly better. You should calculate both ways for both federal and state. Also, if either of you has income-based student loans, remember that filing jointly means both incomes count for calculating the payment, which can drastically increase the monthly amount due.

One thing nobody has mentioned yet - if you file separately and your husband itemizes deductions, you MUST also itemize even if your standard deduction would be higher. My wife and I learned this the hard way. We filed separately to help her student loan payment, but then I had to itemize with barely any deductions because she itemized her medical expenses. Cost us about $2k extra in taxes!