Comparing Married filing Jointly to Married Filing Separately on TurboTax CD

[erikdsar]

I would like to know the following.

-Does TurboTax accurately determine which filing status is better for you or, in some cases, do you have to complete a test return to determine which filing status is better.

-If you switch from filing jointly to separately, can you still upload prior year joint return to new separate return so that TurboTax can transfer the relevant information, or do you have to manually input everything?  The same applies vice versa, if you decide in future years to return to filing a joint return, can you upload prior separate returns into new TurboTax joint return so that relevant information is transferred?

Basically, does TurboTax handle the transitions well, especially in cases where there are more than a basic tax return: capital loss carryovers, rental property issues, property taxes, etc, etc?  

What I'm discovering so far is that if you want to start a new Married Filing Separate return, you either have to start an entire new return without transferring the information (system won't allow me to transfer in this case) or, you have to manually remove the other spouse info as you come to it. 

This seems like it could be a receipe for a problem, especially when current returns depend on prior year returns?

[JohnB5677 · Accepted solution]

-Does TurboTax accurately determine which filing status is better for you or, in some cases, do you have to complete a test return to determine which filing status is better.

• Based on the Personal information you've entered, TurboTax will suggest a filing status.  Selecting Married Filing Jointly, vs. Married Filing Separately is a decision you will have to make.
• Yes, you would have to do a test return to determine your personal best option.  I would suggest the Desktop version, because you can do up to 5 tax returns on it.

-If you switch from filing jointly to separately, can you still upload prior year joint return to new separate return so that TurboTax can transfer the relevant information, or do you have to manually input everything?  The same applies vice versa, if you decide in future years to return to filing a joint return, can you upload prior separate returns into new TurboTax joint return so that relevant information is transferred?

• Yes, you can upload a prior return, but it will be the Married Jointly return.  Please see this link How do I switch from filing jointly to filing separately?
• No, there is no way to combine two married filing separately returns into a married filing jointly return.

Basically, does TurboTax handle the transitions well, especially in cases where there is more than a basic tax return: capital loss carryovers, rental property issues, property taxes, etc.  

• Yes, however, you will have to do the work of allocated each item.

What I'm discovering so far is that if you want to start a new Married Filing Separate return, you either have to start an entire new return without transferring the information (system won't allow me to transfer in this case) or, you have to manually remove the other spouse info as you come to it. 

• That is essentially true.  The link above may provide some shortcuts.

This seems like it could be a recipe for a problem, especially when current returns depend on prior year returns.

• Although you do have to exercise caution, it is a doable task.  
• One note that I wish to emphasize is that if one spouses uses Itemized Deductions, both must use them.  One cannot use Itemized and the other the Standard Deduction. 

[erikdsar]

Thanks.  Very helpful.  I was starting to experiment with the allocations for the capital loss carryover.  I know it goes from $3,000 to $1,500 (Married Jointly to Married Separately), but there is no guidance on TurboTax on how to enter it since I now have to input it as if it is a new return.  It directs me where to look on my prior Joint Return to find the information, but does not tell me how to handle the information when transitioning from Joint to separate. 

Do I just half all the numbers?

[JohnB5677]

You can post your Capital Loss carryover:

1. Start at Federal
2. Wages & Income
3. Scroll down to Investment Income.
4. Select Capital Loss Carryover from the drop-down menu.

[erikdsar]

I appreciate your insight and answers.  What I meant by the last question is not where to find the area to input the information but, what numbers to use?  Turbo Tax tells me where to look on my prior return to find the numbers but, does not tell me how to change the numbers when going from a joint return to a separate return.  I know the capital loss carryover goes from $3,000 for a couple to $1,500 for an individual.  My prior return is for married filing jointly.  Do I just halve the capitol loss carryover figures that Turbo Tax is asking me to input for a married filling separate return? Thanks.

[VolvoGirl]

Yes put half each on the MFS returns.   You have to find the full carryover amount from the joint return.

So in your 2021 return, There is a Carryover Worksheet showing the carryover from the prior year and the current amounts.  Then there is also the Capital Loss Carry Forward worksheet showing the amount transferring over to 2022.

[DawnC]

When you have the MFJ return open, got to Forms, then click on Open Form.    Type in What-If (with the dash).  Then choose that worksheet and you can select different options to compare MFJ vs. MFS.