Kentucky - Married, filing separately on State taxes

[Divi]

So my husband and I both work and live in Kentucky. Federally we're filing together, but state, it gives me an option for either married filing jointly or married but filing separately on a combined return.

When I do jointly, I owe $150, when I do separately I gain $170

Is this normal and is there any penalty for filing separately for the state tax return for Kentucky?

[bellou72]

I know this was a year ago, but I am having difficultly actually figuring out how to file our federal jointly and our KY state separately but on the same return. I know we can create "mock" federal returns for each of us to paper file our individual state returns, but I was hoping for KY specifically there would be a way to just choose an option to file separately but on the same return. Any help you can offer would be greatly appreciated!!

[JB_KA]

I have the same/similar issue as well, now in February of 2019.  I work and live in KY, but my wife lives and works in a different state.  Unfortunately, it looks like I will have to manually file my state based returns since TT's online software is not capable of accommodating this particular tax situation at this time...

[DanielV01 · Accepted solution]

This is a correct filing.  Kentucky is the only state that I've seen that does this, and they encourage it, no penalty.  The reason why is that if you file joint in Kentucky, they only give one standard deduction, and your tax is figured out with combined income on the KY tax table.  You could be in a higher tax bracket.  But when you file separate on a combined return, you each get a standard deduction (unless, of course, you are itemizing), and then each spouse has their income and tax on their income figured out separately, and then later combined.  This usually results in savings, and why you see the result you do.  It's legal to file it either way, but most do file married filing separately on a combined return to get a better tax result.

[Grpa]

Exactly the explanation I was seeking.

[cwoods1]

Thanks so much and giving the details for the reason was an added plus!