Married Filing Jointly vs Married Filing Seperate

[KLCollins]

We went through the TurboTAX questions as Married Filing Jointly and came to the end of the process where it checks to see which way would be the best way to file and we ended up having to pay in to both Federal and State close to $1000 combined.  So we went back to the beginning and changed our filing status to Married Filing Separately and the number jumped to receiving nearly $1800 back as a tax refund.  Common since would say this would be the better way to file this year and get a refund. This seems to good to be true or "easy" so we wondering what could be missing that is making such a drastic difference between each filing. Any advise would be greatly appreciated. 

[xmasbaby0]

You cannot just go back on the same Form 1040 and change it to married filing separately.    If you want to file separate returns you have to prepare TWO tax returns---one for each spouse.   If you are using online TT you pay twice.

If you were legally married at the end of 2020 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 $24,800 (+$1300 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

https://ttlc.intuit.com/questions/1894449-is-it-better-for-a-married-couple-to-file-jointly-or-separ...

[VolvoGirl · Accepted solution]

You just can't change your account.  To compare them you have to use 3 accounts and returns.  One for Joint and 1 each for MFS.

To compare Joint to MFS.  If you are using the Online version, do NOT change anything on your return.  You would have to start with a new account and do a test return.  You don't have to pay unless you want to print it out.  So you might need 3 accounts, one for Joint and two MFS, one for each spouse.

How to start another return in the Online version

https://ttlc.intuit.com/community/using-turbotax/help/how-do-i-start-another-return-in-turbotax-onli...

It would be better to use the Desktop CD/Download program.  It can do unlimited returns and has a What If worksheet to compare them and many other advantages over the online version.

You can buy the Desktop CD/Download program here

https://turbotax.intuit.com/personal-taxes/cd-download/ 

Unless you have a specific reason to file separate returns,

It is usually better to file Joint. Joint has the lowest tax rates and the highest Standard Deduction.   And if you are in a Community Property state MFS gets tricky to figure out.  Here's some things to consider about filing separately……

In the first place you each have to file a separate return, so that's two returns.  And if you are using the Online version that means using 2 accounts and paying the fees twice.  

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.

See …….

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

[KLCollins]

These are both very helpful answers. Thank both.  We have the desktop version and had not thought of creating other test filings.  That is a great idea and what we are going to do to determine which way is best for us. 

thank you both. 

[poppopvh]

Married filing Jointly

[go4th]

When you do the test returns do you show the income of the spouse?

[CarissaM]

Is there a reason you are looking to do a test return? @go4th