topic Re: FIling status in Get your taxes done using TurboTax

FIling status

rjp99us — Mon, 23 Dec 2019 21:26:05 GMT

How do I find out which way is best to file (Married joint or Married separate) when one has more deduction than the other. Also we each have separate accounts except for a joint brokerage account. How do we account for the joint account?

Re: FIling status

VolvoGirl — Mon, 23 Dec 2019 21:52:31 GMT

Joint is almost always the best way to file. 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-separately/00/25590

If you file MFS separately then split the joint accounts in half.

Re: FIling status

Carl — Tue, 24 Dec 2019 00:39:22 GMT

For a married couple to file separate, will always be the worst and most costly way to file tax-wise. For starters, when a married couple files separate returns, they both *automatically* disqualify for a number of deductions and tax credits they would otherwise qualify for if they filed joint. For example, if you file separate you can't take the education loan interest deduction and the earned income credit.

Re: FIling status

xmasbaby0 — Tue, 24 Dec 2019 01:15:53 GMT

If you were legally married at the end of 2019 your filing choices are married filing jointly or married filing separately.

Married Filing Jointly is usually better, even if one spouse had little or no income. When you file a joint return, you and your spouse will get the married filing jointly standard deduction of $24,400 (+$1300 for each spouse 65 or older) You are eligible for more credits including education credits, earned income credit, child and dependent care credit, and a larger income limit to receive the child tax credit.

If you choose to file married filing separately, both spouses have to file the same way—either you both itemize or you both use standard deduction. Your tax rate will be higher than on a joint return. Some of the special rules for filing separately include: you cannot get earned income credit, education credits, adoption credits, or deductions for student loan interest. A higher percent of your Social Security benefits may be taxable. Your limit for SALT (state and local taxes and sales tax) will be only $5000 per spouse. In many cases you will not be able to take the child and dependent care credit. The amount you can contribute to a retirement account will be affected. If you live in a community property state, you will be required to provide additional information regarding your spouse’s income. ( Community property states: AZ, CA, ID, LA, NV, NM, TX, WA, WI)

If you are using online TurboTax to prepare your returns, you will need to prepare two separate returns and pay twice.

https://ttlc.intuit.com/questions/1894449-married-filing-jointly-vs-married-filing-separately

https://ttlc.intuit.com/questions/1901162-married-filing-separately-in-community-property-states

https://ttlc.intuit.com/questions/1894449-is-it-better-for-a-married-couple-to-file-jointly-or-separately

Re: FIling status

Anonymous — Tue, 24 Dec 2019 07:55:42 GMT

MFJ is usually better. to see each possibility, you possibly could do it with one account, but note that you would possibly have to pay several fees and you would need to delete the old return before creating the next version or you could create 3 account - 2 for MFS and 1 for joint but again the fees. you could also buy desktop software that will allow you to do as many versions as you like for only one fee. don't forget state, if your state has an income tax. note that some maximum amount for taxes and mortgage interest are cut in half for MFS and many tax credits can not be taken

for joint account the taxpayer's ID that's on the 1099 should report full amount then subtract half otherwise they'll ne a matching problem the spouse reports the other half.

Re: FIling status

mk12 — Tue, 24 Dec 2019 13:41:59 GMT

As everyone stated, MFJ is usually the best way.

However, you can see for yourself by going to forms, open What-If form and entering the scenario that you want to test out. There is a checkbox that allows you to compare MFJ vs Separate returns. You will need to allocate each person's income for each line item.

Re: FIling status

xmasbaby0 — Tue, 24 Dec 2019 14:02:43 GMT

@mk12 Only desktop software has the "what if?" feature--it is not included with the online software.

WHAT IF…?

If you are using Desktop software:

https://ttlc.intuit.com/questions/2895312-how-can-we-compare-married-filing-jointly-with-married-filing-separately

It is not easy to compare MFJ to MFS using online TT but you can do it. Since you only get one return for each account and user ID, you have to use 3 accounts and user ID’s—one for MFJ and two for each of the MFS returns. Compare, choose, and file—and pay—accordingly.

It is much easier to do this comparison using the desktop version of TT installed from a CD or downloaded to your own computer. You pay once for the software and you can prepare multiple returns easily, and it has a “what if” feature that allows comparisons.