Do we have to start paying quarterly federal taxes? If we filed married, but separate, can we both claim kids as dependents? File married joint or married separate?

[VolvoGirl · Accepted solution]

A dependent can only be claimed on one return.

Joint should be the best way to file.  Unless you have a specific reason to file separate returns,
It is usually better to file Joint. 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/questions/1894449-married-filing-jointly-vs-married-filing-separately

[VolvoGirl]

Are you using the Online version or the Desktop program?

If you want to compare Joint vs MFS,
You can not compare that in the Online version.  If you are using the Online version don't go changing it around.  It won't work and won't give you the right results.  And it will mess up your account and return. You just can't change from joint to separate.  For Online you would have to set up 3 accounts, 1 Joint and 1 each for both of you separate.  You don't have to pay unless you want to print or file.

You can do multiple returns in the Desktop program.  And it has a What-If Worksheet you can use to compare them.

[Leonard]

There are many factors that will affect your tax return filing status and need to start paying quarterly federal taxes. 

The only way for you to determine the best filing status is to prepare your returns, without filing, as filing separately and filing jointly to see which you gives you the lowest overall tax liability and then file your tax returns using that method.