Filing jointly or separate - advice needed

[SLYKTAX]

I made $175K and my wife $35K in 2020.  We are retired and started  to pay for our Medicare Premium.  We have no dependents.  We file jointly in the past and took the Standard Deduction.  The end result, non of us received a stimulus payments.   Our joint AGI also impacted her to pay for a higher Medicare Premium and Part D this year. If we file separate, she will not have to pay an increased Medicare Premium next year.

I paid the  real estate fees and mortgages.  Can my wife  claimed  the mortgage payment which is under my name and not hers ifwe have to choice Itemized Deduction?

Will Turbo Tax help to run separate filing status easily without having to input personal data again and again? Is TT  Premium Version worth upgrading?

[VolvoGirl · Accepted solution]

You can both take the Standard Deduction or Itemize.  But you both have to do the same way.

You just can't change your account. To compare them you have to use 3 accounts and returns. One for Joint and 1 each for MFS.

To compare Joint to MFS. If you are using the Online version, do NOT change anything on your return. You would have to start with a new account and do a test return. You don't have to pay unless you want to print it out. So you might need 3 accounts, one for Joint and two MFS, one for each spouse.

How to start another return in the Online version
https://ttlc.intuit.com/community/using-turbotax/help/how-do-i-start-another-return-in-turbotax-onli...

It would be better to use the Desktop CD/Download program. It can do unlimited returns and has a What If worksheet to compare them and many other advantages over the online version. You can move your current online return to the Desktop program without paying for Online.

You can buy the Desktop CD/Download program here
https://turbotax.intuit.com/personal-taxes/cd-download

Unless you have a specific reason to file separate returns,

It is usually better to file Joint. Joint has the lowest tax rates and the highest Standard Deduction. And if you are in a Community Property state MFS gets tricky to figure out. Here's some things to consider about filing separately……

In the first place you each have to file a separate return, so that's two returns. And if you are using the Online version that means using 2 accounts and paying the fees twice.

Many people think they come out better when filing Married Filing Separate but they are probably doing it wrong. If one person itemizes deductions then the other one must itemize too, even if it's less than the standard deduction, even if it is ZERO!

And there are several credits you can't take when filing separately, like the

EITC Earned Income Tax Credit

Child Care Credit

Educational Deductions and Credits

And contributions to IRA and ROTH IRA are limited when you file MFS.

Also if you file Married Filing Separately up to 85`% of your Social Security becomes taxable right away even with zero other income.

See …….
https://ttlc.intuit.com/community/married/help/is-it-better-for-a-married-couple-to-file-jointly-or-...

[SLYKTAX]

Thanks.  I used a Desktop version. Hopefully, I can run three files without in putting the same data three times.

[VolvoGirl · Accepted solution]

You probably will have to fill out 3 new returns.  The 2 MFS returns will have different data to enter.   What same data do you need to enter on all 3 returns?  Well you could fill out 1 of the MFS returns first.  Then copy it, go up to FILE - Save As and give it another name and then change it to Joint and add the other spouse to it.  Then you have to start a new blank return to do the other spouse's MFS return.  

[SLYKTAX]

I run my own separate TAX today and I don't think filing separate will save more because TT said I awed $4,000 plus where as filing Joint get $3,000 plus refund (I paid $4000 ES TAX).  That is a difference of $7,000 plus.  I have to give up doing my wife's tax.  

However, something strange came up while TT did the error checks on my single filing TAX. It said:  IRA Information WorkSheet Line 24 - Spouse 2016 should not have a value. Your filing status is not married filing joint. 

Well, I have been doing joint filing since 2013 and how did TT get this data?  We both contribute ROTH IRA  starting on Year 2014.  I cannot change our 2016 TT filing status to fix that error.  Does anyone know why?

[ThomasM125]

You are probably getting that error message since you are filing married-separate. As such, there shouldn't be any information on your tax return regarding your spouse.

TurboTax will track the basis in your IRA if you indicate that you want to do that, so that may be why there is IRA information on your tax return from previous periods.