patrick.net

It is unlikely to pay off filing separately due to relatively similar incomes plus the disqualification of student loan deduction for filing separately. Additionally both parties would need to either take standard deduction or itemize. Can't have 1 person take the standard and the other itemize for example.

does not matter.

Divorce (paperwork wise) will work better.

Thank you for the feedback guys.

What would be the student loan deduction? I'm under the impression that with the salaries specified, there is none.

The incintives for filing jointly as well as the sanctity of the Family unit filer, is quickly diminishing.
When it comes to Obamacare incintives or penalties regardless of which side you are on of the giving and revieving.
Filing single works best for both subisdies as well as penalties.

We file jointly because DAMN IT! that's what we are, man and wife. And no Liberal pin head is going legislate shitty enough legislation or staff a personal KGB taskforce in the IRS, have his crackpot minions redefine marriage, sue me for whether I bake a gay couple a cake or not, enough to make me legally deny that we're man and wife and I'm head of the household.

My rules my House! Unlike that Nuthouse in Washington.

So you really have to ask your self is she your wife or tax liablity.

Bay Area,
My wife and I had student loans like your wife ($250,000 between the two of us). We were never able to deduct the interest because we had too much income. We rented for those 17 years of repayment, so we just took the standard deduction. If you bought a house and own a rental property, you might be able to get creative with deductions, but you should probably ask around and see if you know someone who's in a similar situation (or consult a tax professional).

BayArea says

My gross income is $125K, hers is $100K. I own a rental property that's being financed currently and she has about $150K worth of school loans if it makes a difference.

I'd appreciate any advise you can share.

Welcome to your new tax bracket. Like CIC said you might be able to finagle business expenses into substantial deductions. The problem is at your income level is you will run into AMT (alternative minimum tax) which can knock them right back out again. Also if you can only claim losses 3 years out of 5.

The IRS really wants joint filers so you lose a number of deductions and credits filing separately. The only situation I can think of where separate is an advantage is with high out of pocket medical expenses and you need to make the 10% threshold.