Total income is less than $25K but turbo tax still says I owe tax

[mapmyride5000]

I am confused by the tax rules. My father is 72 years old, and has social security of $28K and other income of $3,300/yr.  If I follow the worksheet on the back of the ssa1099, to take the SS amount, divide in half=$14,000+ other income, $3,300 which gives the total taxable income of $17,300. He is filing married, but separately. When I enter this information into turbo tax, it says that he owes about $400. Help me understand why this income is taxable. 

[HelenC12]

The IRS penalizes taxpayers for filing Married Filing Separately (MFS) when they are married. On the instructions for the Social Security Benefits Worksheet, Line 8, Enter $25,000 ($32,000 if MFJ; $0 if married filing separately and you lived with your spouse at any time in 2021).

• For example: The IRS taxable portion of Social Security is $14,706 plus $3,300 = $18,006 Adjusted Gross Income less the Standard Deduction of $13,900 which equals taxable income of $4,107. According to the IRS tax table, the tax is $413.

Note: If his wife itemizes her deductions, your father would have to itemize his deductions even if he doesn't have any deductions. The Standard Deduction in my example of $13,900 would not be allowed. If his standard deduction is zero, he would pay income taxes on $18,006.

[mapmyride5000]

HelenC12, thank you for that explanation. I think I am beginning to understand. To further clarify, his wife is not at retirement age yet and makes about $30K/yr. Neither one of them is itemizing their returns. When I use turbo tax and work their forms together, married filing jointly, the "federal tax due" box takes about a $1,300 hit. So, I guess filing Married/separatly is the best way to go? Is there a document that you can link to help me better explain this to them?

[VolvoGirl · Accepted solution]

Joint should still be better.  

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 on Schedule A then the other one must itemize too, even if it's less than the standard deduction, even if it is ZERO!  (Business expenses are not itemized deductions.  Business goes on Schedule C not A.)

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-...