Since her $90,000.00 is tax exempt, you should file as Married Filing Jointly (MFJ). This will help lower the tax on your $130,000.00 of taxable income. Using the 2021 tables, this will expose $104,900.00 to Federal Tax in the 22% tax bracket. Married Filing Separately would expose $117,500.00 to Federal Tax in the 24% tax bracket. More taxable income at a higher tax bracket. Not good.
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