I noticed my refund went down when I added my wife's W-2. Why?

wil-whittaker09 · ‎May 31, 2019

We file jointly, and my Federal Refund went down after I added her W2. I thought it would go up?

AnthonyC · ‎May 31, 2019

It is quite common for this to happen. Your tax liability is calculated on your total income (after deductions and credits), not on each W2. As your taxable income increases, your tax liability increases and you may even get placed into a higher tax bracket. Also, as taxable income increases, you may lose eligibility for income-based tax credits such as the Earned Income Credit or lose the ability to claim certain deductions.

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AnthonyC · ‎May 31, 2019

It is quite common for this to happen. Your tax liability is calculated on your total income (after deductions and credits), not on each W2. As your taxable income increases, your tax liability increases and you may even get placed into a higher tax bracket. Also, as taxable income increases, you may lose eligibility for income-based tax credits such as the Earned Income Credit or lose the ability to claim certain deductions.

Jbergeman2470 · ‎February 1, 2020

Would it be better to then file separate from eachother?

KathrynG3 · ‎February 2, 2020

It is unlikely that married filing separately will give you a better refund. The refund calculator is in-process until everything has been entered. For lower-income scenarios, credits are applied whereas the credits are not allowed for higher-income returns.

To learn more: Why did my refund drop when I entered a second W-2?

Is it better for a married couple to file jointly or separately?