Applying an overpayment from last year's joint return to this year's separate returns

[ari1123]

My spouse and I live and work in NJ. Last year we filed jointly but this year we are filing separately.  We made an overpayment on last year's joint return, which we applied to this year's taxes.  What forms do I need to file (for federal and NJ) with each of our separate returns to put part of that overpayment on my return and part of it on my spouse's return?  How do I get TurboTax to generate these forms properly?

[VolvoGirl]

You each enter half of the overpayment.

Federal on left

Deductions and Credits at top

Then scroll way down to Estimates and Other Taxes Paid

Income Taxes - Click the Start or Revisit

Next page scroll down to 2021 Refund Applied to 2022

Click Start or Update by the tax you applied

Then for state, you need to click on the state tab and go through state again for it to update.

May I ask why you are filing separate?  That is the worst way to file.  It is usually better to file Joint. Joint has the lowest tax rates and the highest Standard Deduction and there are several credits you can't take or are limited.

[rjs]

You don't need any special forms. Just enter the amount that each of you is using in your separate returns, as VolvoGirl indicated. Note that you have to enter the state amount in the federal section of TurboTax.

You do not have to divide the overpayment equally. You can divide it in any way you choose as long as you both agree.

[ari1123]

Thanks rjs and VolvoGirl - I really appreciate the quick and helpful replies!

VolvoGirl - to your point, I don't want to go into too much detail about our specific financial situation, but you are correct in that for all previous years, it was to our advantage to file jointly, whereas this year, when I worked out our returns both ways (joint and separate) in TurboTax desktop, I found (to my surprise) that our total tax bill is significantly lower if we file separately this year.  Since I have never previously filed separately, and it seems to be somewhat more complicated than filing jointly, I wanted to make sure I'm doing it correctly, hence the questions I've been posting:

https://ttlc.intuit.com/community/taxes/discussion/handling-dividends-and-interest-when-married-fili...
https://ttlc.intuit.com/community/taxes/discussion/when-married-filing-separately-do-both-spouses-ne...
 

Thanks again to both of you for your helpful responses!

[rjs]

When you file separately, are you aware that you must either both take the standard deduction or both itemize deductions? You are not allowed to take itemized deductions on one of your returns and take the standard deduction on the other return. If you did that, your comparison of your total tax bill is not valid.

[VolvoGirl]

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!  And if you are in a Community Property state it can be complicated to figure out.

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-...