Complicated Situations

[Theaj]

I'm trying to figure out how to get the most from my tax return. I was married this year and my husband is on SSDI. I was unable to work much this year because I had to care for him and our 2 kids (6 & 13). I will have made around $6000 by the end of the year. I have always filed my husband separately and then claimed the kids on my return because of his SSDI income. This year is different because we were officially married. His SSDI is more than what I made. What is the best way to file this year to get the most? I can't be paid in Michigan to be his caregiver as his wife so we really need all the help we can get.

Thank you in advance.

[Bsch4477]

Filing jointly is almost always the better filing status and from what you posted you won’t owe any tax. 

[xmasbaby0]

All of the child-related credits like earned income credit and child tax credit are based on income earned from working.   If you file separate tax returns you will not be eligible for earned income credit.   You need to file a joint tax return with your spouse.  

How to start a new joint return

You will not be able to merge two previous TT account to start your new joint return.  You can transfer ONE of your 2023 returns into a new return, so choose the most complicated one.  The other spouse’s information needs to be entered manually.  The first name you enter will be the “primary” taxpayer——and in subsequent years you need to keep the names in that order—do not try to change the order of the names.

When you enter the primary spouse’s information in My Info, you have to answer the question "Were you married?"  If you click the button for Married, then a drop down will appear that asks, "Do you want to file this return together with your spouse?"  Then you choose YES to file a joint return.  You enter your spouse's information into My Info.  Whenever you are entering income information there should then be a spot for you and for your spouse's income information.  WATCH for the names as you enter income on the screens.

When you prepare a joint return you include all the information for both spouses on the SAME tax return.  Include all of your personal information, all of your income from every source, all dependents (if any), all credits and deductions for both of you.  You get ONE refund with both names on it.

If you were legally married at the end of 2024 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 $29,200 (+ $1550 for each spouse 65 or older)  for 2024. 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 since with online, you get one return per fee.

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...

[Hal_Al]

File as Married Filing Jointly (MFJ).

Social security (SS), including SSDI,  only becomes taxable when added to sufficient other income. If you are otherwise required to file a tax return, you do need to enter SS in TurboTax (TT). TT will determine the taxable portion.

You may be thinking that  filing Married Filing Separately (MFS) is going to save you money, because you won't have to add your spouse’s SS income to your return. It doesn't work that way. There is a special rule that says SS becomes taxable at zero ($0) other income when filing as MFS. The doubled standard deduction, for MFJ, will usually wipe out most of the spouse’s income, on a joint return. 

Social security only becomes taxable when added to sufficient other income. If you are otherwise required to file a tax return, you do need to enter it in TurboTax (TT). TT will determine the taxable portion.

Social security (including SSDI) becomes taxable when your income, including 1/2 your social security, reaches:

Married Filing Jointly(MFJ): $32,000

Single or head of household: $25,000

Married Filing Separately and lived with your spouse at any time during the tax year: $0

After TurboTax (TT) calculates the taxable portion of SS, it puts the total amount of SS on line 6a of form 1040 and the taxable amount on line 6b. TT also produces a worksheet  to show how the taxable amount is calculated. Although most people pay tax on 85% of their SS. it can be less for lower income taxpayers.