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Retirement tax questions
No, you shouldn’t file married filing separately because of this. Your combined federal tax liability would most likely be more if you filed separately.
The EXEMPT tax status might affect whether your spouse has Social Security withheld from their income, but federal income tax withholding should be taken out when you’re dealing with taxable income. If box 2 on your Form W-2 shows EXEMPT for Federal income tax withheld, that’s what’s causing your problem.
Just to be clear: You’re going to have X amount of tax liability, no matter what the withholding amount, but you need withholding on your spouse’s Form W-2 to offset that tax liability, decreasing the amount of tax owed, or generating a refund.
You can do this in TurboTax -- please see the TurboTax Help article How do I update my 2022 withholdings and print a new W-4? for more information.
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