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Level 1
posted Sep 30, 2021 9:09:22 AM

Joint Filing vs Separate Filing California

My wife and I just started new jobs. We are both making good money (100k+80k) 

Last year we filed jointly, but looking at the numbers, we need to add hundreds of dollars every paycheck of extra payments for taxes. 

Is there a good way of knowing if we would be paying less if we filed separately?

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1 Replies
Employee Tax Expert
Sep 30, 2021 10:13:25 AM

Hi yonatans, thanks for joining the special forum today.

 

Since tax circumstances vary for each couple/household, you can set up test IDs with TurboTax Online for you and your spouse using Married Filing Separately (MFS) and compare the results. To complicate the matter, California is a community property state, you would need to allocate income, deductions, credits per the special rules for MFS. Please refer to page 10 "Joint Return Versus Separate Returns" of IRS Pub 555 Community Property

https://www.irs.gov/pub/irs-pdf/p555.pdf

 

In general, MFS has negatives such as:

  1. You should itemize deductions if your spouse itemizes deductions, because you can't claim the standard deduction.
  2. You can't take the credit for child and dependent care expenses in most instances.
  3. You can't take the EIC.
  4. You can't exclude any interest income from qualified U.S. savings bonds that you used for higher education expenses.
  5. You can't take the credit for the elderly or the disabled, unless you lived apart from your spouse all year.
  6. You will likely have to include in income a greater percentage of any social security benefits or equivalent railroad retirement benefits you received.
  7. You can't deduct interest paid on a qualified student loan.
  8. You can't take the education credits.
  9. You may have a smaller child tax credit and credit for other dependents than you would on a joint return.
  10. You can't take the exclusion or credit for adoption expenses in most instances.

I also include two excellent TurboTax articles on this subject.

Should You and Your Spouse File Taxes Jointly or Separately?

https://turbotax.intuit.com/tax-tips/marriage/should-you-and-your-spouse-file-taxes-jointly-or-separately/L7gyjnqyM

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

https://ttlc.intuit.com/community/married/help/is-it-better-for-a-married-couple-to-file-jointly-or-separately/00/25590

 

Hope the above helps.