My wife is an independent contractor and she claims to be able to get all sorts of deductions that jointly we will not get. Do I do the return first as MFJ and then what? If I then select MFS, Does TurboTax ask what items should be split out between each person or do I have to crate 2 MFS returns from scratch? What happens to all of last year's information if I have to create two MFS returns? Just a bit confused.
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How are you trying to file? Your post is confusing because you started off saying this is your first time "filing MFJ", then later you are talking about filing separate returns. Which are you trying to do?
Some general information:
Filing separate returns is usually the worst way to file, especially if you have children, because you lose a lot of child-related credits. Filing separately also means both of you have to file the same way---you both have to itemize or you both have to use standard deduction. If one of you uses the itemized deductions then the other one might not have enough deductions and may not even get their standard deduction amount---thus making more of your income taxable.
If your spouse is self-employed, her business expenses go on a Schedule C. That is where she can enter expenses such as mileage, home office, supplies, etc. Itemized deductions like mortgage interest, medical expenses, property tax, etc. go on a Schedule A shared between both spouses---or divided between the two of you if you file separately.
If you file jointly, you prepare ONE tax return for both of you. All of your combined income and all of your information goes on that one return, and the refund comes with both names on it. Or the tax due is owed by the two of you.
If you file married filing separately, you have to prepare TWO returns---one for each of you. If you use online TurboTax that means using two accounts---one for each of you---and paying twice.
Your spouse is self-employed---so she must use either online Self-Employed or any version of the CD/download. You can also enter W-2 income or any other sort of income into that version. If you choose to file separately, you will need either Deluxe or Premier---or any version of the CD/download.
Using the CD/download would make the most sense for the two of you so that you could compare both ways of filing more easily.
It is not easy to compare MFJ to MFS using online TT but you can do it. Since you only get one return for each account and user ID, you have to use 3 accounts and user ID’s—one for MFJ and two for each of the MFS returns. Compare, choose, and file—and pay—accordingly.
It is much easier to do this comparison using the desktop version of TT installed from a CD or downloaded to your own computer. You pay once for the software and you can prepare multiple returns easily, and it has a “what if” feature that allows comparisons.
JOINT vs. SEPARATE RETURNS 2018 and beyond
If you were legally married at the end of 2022 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 $25,900 (+$1400 for each spouse 65 or older) 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.
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
To begin a new joint return on TurboTax:
You will not be able to merge two previous TT account to start your new joint return. You can transfer ONE of your 2021 returns into a new return, so choose the most complicated one. The other spouse’s information needs to be entered manually.
When you enter your own 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 would then 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. Income screens will have spots with each spouse’s name—be careful to enter under the correct names.
If you choose to file separate returns, after you say "yes" to being married, when it asks if you want to file together with your spouse, say NO. Then you will still have to enter some information about your spouse, because the IRS cross checks the SSN's to make sure you do not "double dip" and each claim the same itemized deductions.
Best Wishes!
Thanks, yes, I can see how my post was confusing. Thanks for trying to navigate my intent rather than my poor typing. To clarify:
I filed in 2021 MFJ. My spouse did not work.
I am trying to decide how to file in 2022 MFJ or MFS as my spouse worked as an independent contractor and now has to pay in taxes AND had a decent about of deductions as well as medical expenses. The med expenses if we file MFJ will not exceed 7.5% but likely will for her alone.
My question: In TurboTax H&B for Windows, when I created a new file for 2022, it imported everything from 2021, so both of our information. I selected MFJ initially, and then changed it to MFS thinking TurboTax might start asking me questions about what income or what deductions go to each of us, but that doesn't seem to be the case. So I created a new tax file, but it doesn't seem to want to import prior year's info, so I guess I have to start from scratch and manually create three 2022 files to compare the benefit of filing MFJ or MFS (1 MFJ and 2 MFS files). I thought I saw online there might be a "What If?" feature to do comparisons of MFJ v MFS but for the life of me, I can't find it.
Just looking for any step by step help in how to actually do this. e.g.,
Step 1: Create new 2022 file MFS for person 1 - do I ONLY put my personal contact information into that Turbotax file or does my spouse's personal info also need to go into it? This is where I start getting confused. If only my info is in mine and her info is in hers how does the IRS know that are related? Do they care or does it matter?
I hope this makes more sense.
THANK YOU!!!!!! Appreciate your help and guidance!!!
" If only my info is in mine and her info is in hers how does the IRS know that are related? Do they care or does it matter?"
The IRS knows because each of you has to include the other spouse's SSN on your own return---that way the IRS can cross check. Even when you file MFS you have to enter information for your spouse.
Sorry---this will be laborious----but the most accurate way to compare would be to create those three returns---a MFJ return and two MFS returns.
You can try "what if?" but I would not fully trust the results the way I would trust the results of preparing the 3 returns.
By the way what state are you in? If you are in a Community Property state MFS gets tricky to figure out.
Find the What-If worksheet.
Go to Forms Mode, click Forms in the upper right or on the left for Mac. Then click Open Forms box in the top of the column on the left. Open the US listing of forms and towards the bottom find the What-if worksheet. It's right under Estimated Taxes.
Or try…Go into Forms View. Once there, at the top of the left column, click on the icon for "Open Form". A popup window will appear. In the text line, type the word "what" without quotes. You should see "what-if worksheet" appear as a selection choice. Double-click it to launch the form.
Thanks hopefully last question - in Home & Business, when I create the 2nd and 3rd returns to do the MS for each of us, do I ask TurboTax to import that info from 2021 for both of us into each of those two new returns? It didn't seem to be an option, when i tried it the yesterday. It appeared once i imported the info into the 1st 2022 MFJ return, when i tried to create a new return to start a MFS return, it didn't show that import the 2021 MFJ as an option.
Oh I lied, one other question: when creating the MFS returns, given I now understand both our taxpayer info has to be on both of them, do i have a way to state that I am the primary taxpayer on one and my spouse is the primary on the other?
Thanks to both of you for responding!
No. You cannot import information from more than one 2021 return in to a new 2022 return.
No.....you do not state anywhere that you are the primary taxpayer. Your name will be the only name shown as a taxpayer on your own 1040; your spouse's name will be the only taxpayer name shown on hers. Up in the "filing status" area at the top of the 1040 form it will show the name of the person who you are filing MFS with.
No do not transfer from a Joint 2021 return into the 2 separate returns. You can't switch the names around and you might not be able to get rid of the other person's info everywhere it is.
When you enter your personal info on the MFS return it will ask you for the spouse's name and ssn. Same when you do the other MFS return. Only the person who the MFS return is for will be Primary. If you have any dependents only list them on 1 MFS return. You can split them up.
Here's some more info on filing MFS
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.
Ha! gotta love asynchronous communications right?
"No. You cannot import information from more than one 2021 return in to a new 2022 return."
I may have not been clear, I am NOT trying to important two 2021 returns into one 2022 return. I'm trying to import the same 2021 MFJ return into multiple new 2022 returns. I'm simply stating that when I try and import the 2021 MFJ into 2022 it works great the first time, but when I then create a new 2022 return to start the MFS return, the MFJ from 2021 doesn't seem to pop up as an option to import into that new 2022 MFS return. Does that make sense?
I also noticed when I imported the 2021 into the 2022 return and just for kicks I changed filing status for 2022 to MFS it didn't ask which return this was for, me or my spouse. Both of our info was still in there, hence my confusion and question about how /where do we enter the primary taxpayer info since TurboTax H&B didn't ask me 🙂
Did you see my post? No do not transfer from the Joint return into the MFS returns. You have to start the MFS returns from scratch.
Thank you!!!!
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