I was married in October 2017 and my wife and I both had earned income in 2017. My wife's family can claim her as a dependent since they paid more than half of her expenses for the year. Can we still file jointly if we are just recovering her taxes paid? Or do we have to file separately? It is a significant difference in taxes to pay!
Her parent's cannot claim her if you file a joint return unless that joint return is only to claim a refund and there would be no tax liability for either spouse on separate returns. Below are the requirements that her parents have to meet to claim her.
It is the choice of you and your wife whether you file jointly or separately. If you file jointly, they cannot claim her as a dependent. Your return would be correct and the parents return would not.
You and your wife cannot file jointly if her parents are claiming her as a dependent (IRS rule).
thank you very much! Turbo Tax was very confusing here; even after checking the box that my spouse would be claimed as a dependent on someone else's return, it still instructed me to file Married filing Jointly! Then at the end in the Review, it alerted me ...
You can file jointly/separately. It is your call, not the parents. If you want to allow them to do that then that is okay and your choice, but you will likely pay higher taxes by doing so. Just because they claim her that does not supersede your right to file jointly.
If you file jointly, they will lose her exemption. That is the IRS rules.