Bill, in answer to your observations:
Montana is a state with a marriage penalty, and the remedy is Married Filing Combined Separately, as recommended by a CPA friend of mine and as proven when I calculate our Montana taxes.
To compare with your Montana test, I again navigated the TurboTax MT interview, which began by confirming our Montana residency status and then suggested that we file as Married Filing Separate.
Late in the Montana interview TurboTax says “Confirming Married Filing Combined Separate ...we’ve determined that there isn’t a tax benefit to filing your Montana return as married filing joint. We recommend keeping your current filing status of married filing combined separate.”
Bill, please note that our Montana tax information is considerably more complicated than your interest income test. When I choose Married Filing Jointly, TurboTax correctly gives me and my wife the $800 interest exclusion ($1600 total), but this is a small benefit compared to our Montana marriage penalty. For my wife and me, Married Filing Jointly yields a MT tax burden $549 greater than if we choose Married Filing Separately; and this marriage penalty would be $603 if TurboTax correctly applied the $800 interest exclusion to both me and my wife when we choose Married Filing Combined Separately.
My wife and I had already looked at both Montana filing status scenarios. For many years, using TurboTax, we have chosen Married Filing Combined Separately for our Montana taxes. In our 2021 return, TurboTax correctly gave me and my wife the $800 interest exclusion ($1600 total).
This afternoon, I e-filed our Montana taxes as Married Filing Combined Separately, so I don’t plan to spend more time or mental energy on this. I respect the time and effort that you and others have devoted to this apparent discrepancy between TurboTax 2021 and TurboTax 2022. Considering the hardships that many other Americans encounter, I consider myself very fortunate and wish the best to you and others at TurboTax.
