Hi @DMarkM1 ,
Thank you so much for your elaborative response, I much appreciate it.
Based on your input about how NC calculates taxable income for my situation, I did a quick comparison between MFJ and MFS for NC state tax, turns out MFS would give me more tax break with my numbers. But again, numbers could change. So I will keep my options open and compare MFJ and MFS as you suggested.
I have a few more follow questions:-
1. While allocating/deciding our individual share of 1099-INT income for our joint account, do we need to draft any paperwork for our federal and state returns showing these calculations? I read some comments about the primary account holder issuing 1099-INT to another joint account holder. In our case, both of us contribute to the joint account. Would this process differ based on our federal/state return filing status?
2. Based on your inputs, I am also considering MFS status for federal returns to keep things simple. However, I won't know the favorable filing status until next year when I have the final numbers. In this case, how should we select our filing status for federal and state tax withholding? I want to avoid the scenario of filing Form 2210 (Underpayment of estimated taxes) next year, and if possible also not to pay too much in tax withholdings. Any recommendations on the filling status for our W-4 and NC-4?
3. My spouse is NRA and I am a US resident, we already chose to file jointly in 2022 for the 2021 tax return by following the required IRS process. My understanding is that we both can choose to file MFS for federal taxes and report worldwide income while also taking the MFS standard deduction. Is this correct? Do we need to mention the scenario anywhere while filing the return?
Again, thank you in advance. 🙂
