TurboTax

File with experts
File your taxes
Experts at your fingertips

An expert helps with your taxes, or does them for you
TurboTax Expert Full Service

TurboTax Expert Assist

TurboTax Self-Employed
Prior year taxes
File myself
File myself
Do it yourself

We'll guide you step-by-step
TurboTax Do It Yourself

TurboTax Self-Employed

TurboTax Desktop
TurboTax Free

Activate your product

Prior year taxes
Business
Business
Business taxes

Get your T2 corporate return done right, your way
TurboTax Business

TurboTax Business Desktop
Tax situations
Tax situations
Tax situations

Find extra guidance for your big life moves
For investors

For 25 and younger

For self-employed

For new to Canada

For life changes
Resources
Resources
Resources

Explore tax tools, get tips, and read reviews
Personal income tax calculator

RRSP savings calculator

Learning hub

TurboTax support (FAQ)

TurboTax community
Pricing

Level 4

Question

Filing Jointly Vs Separately (High Income)

Forum|Forum|4 years ago
February 13, 2022
7 replies
47 views

Hi -- pretty sure I am doing this correctly but looking for confirmation. If a husband and wife each have a high income (let's say 500k each as an example), then I do not think there's any difference in married filing separately vs married filing jointly for federal -- is that correct? I was surprised to get the same answer when doing it both ways but then when I looked at the tables, that does seem to be the case. (While it doesn't make a difference for Federal, It makes a difference in NY and its more advantageous to file separately)

SweetieJean

Alumni - Champ

Please see this:

Should You and Your Spouse File Taxes Jointly or Separately? - TurboTax Tax Tips & Videos (intuit.com)

Mike9241

Level 15

essentially correct but there are caveats. for MFS both must use either the standard deduction or itemize. certain credits are lost when MFS

since we can't see your returns there could be other things

Mike9241

brian-perriginoAuthor

Level 4

Thanks all. I should have been more specific in that both earners will take the standard deduction, no kids, and live in New York City. For NYC residents, there's a NYC education. credit (line 69a) that phases out after $500K. So if both earners are under $500K, they each get the credit whereas combined they exceed $500K and do not get the credit thus the desire to file separately. It amounts to about a $2,000 savings.

RaifH

Level 10

Yes, you are correct. If both of you earn about the same amount and are in the same tax bracket and neither of you is eligible for any of the credits or impacted by any of the limitations that have already been listed, then you may see more of a benefit by filing separately because of the impact on your state return.

LeonardS

Level 14

No, generally when a couple file separately vs jointly the combined tax liability, federal and state, is higher filing separately vs than filing a joint return. However, this general statement does not apply in all cases. When comparing the two methods you were correct to include your NY state return for an accurate comparison.

Disadvantages of Married Filing Separately

(in addition to various amounts normally being half of MFJ amount)

Lost Credits

•Earned income credit.

•Credit for the elderly or the disabled.1

•Child and dependent care credit.2

•Adoption credit.2

Lost Education Benefits

•Education credits.

•Student loan interest deduction.

•Tuition and fees deduction.

•U.S. savings bond interest exclusion.

Standard Deduction

If one spouse itemizes deductions, the other must also itemize (that is, cannot claim the standard deduction).

Taxable Social Security

A greater percentage of social security benefits may be taxable.

IRAs

•Traditional IRA deduction and Roth IRA contributions phased out at $10,000 of modified AGI.1

•Spousal IRA rules do not apply.

Passive Losses

•Rental real estate loss allowance is limited to $12,500 per spouse ($0 if spouses lived together at any time during the year), with lower phase-out thresholds.

•One spouse’s passive income cannot be offset by the other spouse’s passive loss.

AMT Exemption

In addition to the exemption phasing out, some high-income taxpayers must add an amount back to AMTI.

Filing Requirement

Regardless of the age of the taxpayer, if gross income is at least $5, a tax return must be filed.

1 Unless spouses lived apart for the entire year.

2 Unless spouses lived apart for the last six months of the year.

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"