Does anyone else have experience with TurboTax telling you that you would get a larger tax refund by filing separately?

[ChandlerHeel1]

I started married filing jointly as I have for years. During I think it was the federal return review part, I was told "You might want to file separately" and that I could save about 1800 by doing so. I have read quite a bit about this, most of it the standard "most will find that married filing jointly is better...that there are more tax breaks when filing jointly...you have to both do itemized or both do standard deductions...blah blah blah" And, that to see which is better,  you kind of need to do it both ways to truly compare. Well, I have done so (at least mostly) and it looks to me like filing separately was actually *slightly* worse, like 300 worse, not 1800 better. Counting both federal and state. And, I am  pretty sure I am not missing anything. 

Most/all of our deductions I am keeping on mine or what I would call the main tax return at this point. I can imagine that there could be quite a few combinations of returns here where I have some deductions on mine and my wife's return has some. I have already seen that itemized for both is better than standard on both.

Has the scenario where it tells you that filing separately would be better happened to anyone else out there? Did you have any experience either positive or negative with trying it as suggested? I am heavily leaning towards bagging it and going back to jointly. If there are examples like mine of switching and getting little or no benefit even though TurboTax stated it would be otherwise (or where it did help), let me know.

Thanks!

[xmasbaby0]

Not sure what you saw or think you saw, but TurboTax does not advise you to file separately or jointly.   If you saw something from TurboTax telling you it would be better for you to file separately, we would love to see a screen shot.

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.

If you were legally married at the end of 2021 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 $25,100 (+$1350 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-separ...

[ChandlerHeel1]

Thanks xmasbaby0!

I'll probably read your reply in more detail and may send a longer reply when I get home from work (and have to file by the tax extension deadline tonight), but yes, TurboTax was at least suggesting that MFS was better for my situation. Not sure if advise is the right word, but it was at least saying I might want to consider it. 

Yep, I grabbed a small screenshot. Attached. I was going to include the "Federal due" and "State due" parts of the screen just to further emphasize that I saw what I really think I saw (I am a software engineer working on web apps in fact though not in the tax domain, so I know how users' reports of situations often go), but I am going to lean towards showing as little as possible jussstttt in case there is even the tiniest chance of sharing too  much personal type information.

Thanks again!

[ChandlerHeel1]

By the way, I have taxes due, not a tax refund. And, paid most of the taxes due by the April deadline...at least it was very close. I misstated that in the subject line. Sorry. Not sure if at all possible that that makes a difference between taxes due or tax refund as far as what TurboTax might advise.

[VolvoGirl]

Did you enter a lot of medical deductions?  Or have student loans?  That's about the only things I can think of to file separately.   What does the learn more link say?  First time we ever seen that screen or heard of Turbo Tax saying that.  

[ChandlerHeel1]

No student loans. But, yes, we spent quite a bit on medical expenses last year, a little over 10,000. We donated quite a bit to a charity. Maybe that's it. I don't think my tax situation is all that unique....maybe it is. I think I read an estimate somewhere that around 94% of married couples come out better filing jointly. Somewhere in the TurboTax code, it must have done calculations and thought that MFS would come out better for me though.

I have a traditional job with a W-2. My wife is in a business partnership and has a K-1.

[tiredoftaxstuff]

The same thing happened to me. "You might want to file separately. We did the math and filing separately could get you $2238 more than filing jointly" I thought it was weird but went through all of the steps to see if that were true and I couldn't see how it would be better to go separately. It was worse. When I asked a live expert I was told they couldn't advise on that matter. Not very helpful. I guess I need to see a REAL expert and accept the fact that I just wasted hours of my life trying ti figure this out. 

[AnnetteB6]

We would like to take a closer look at the situation you described.  Married Filing Separately can be more beneficial in certain cases.  If you would be willing, please provide us with a diagnostic copy of your Married Filing Joint tax file.  

The diagnostic file will not contain personally identifiable information, only numbers related to your tax forms.  To do so, follow the instructions below and post the token number along with which version of TurboTax you are using in a follow-up thread.

Use these steps if you are using TurboTax Online:

• Sign in to your account and be sure you are in your tax return.
• Select Tax Tools in the menu to the left.
• Select Tools.
• Select Share my file with agent.
• A pop-up message will appear, select OK to send the sanitized diagnostic copy to us.
• Post the token number here. 

If you are using a CD/downloaded version of TurboTax, use these steps:

• Select Online at the top of the screen.
• Select Send Tax File to Agent.
• Click OK.
• Post the token number here.

@tiredoftaxstuff