Married filing tax jointly or separately ?

[zgunsmoke]

Recently I am considering filing our tax separately, but I got confused with some articles from turbotax website.

One of the article from turbotax (https://turbotax.intuit.com/tax-tips/marriage/should-you-and-your-spouse-[product key removed]ly-or-...) mentioned that "The standard deduction for separate filers is far lower than that offered to joint filers. In 2020, married filing separately taxpayers only receive a standard deduction of $12,400 compared to the $24,800 offered to those who filed jointly. "  I am totally confused. To me, it seems they are the same. From the family perspective, filing separately, each one will get $12,400 deduction, so add together it's still $24,800 which equal to the $24,800 deduction when filing jointly.

Another turbotax article (https://turbotax.intuit.com/tax-tips/marriage/when-married-filing-separately-will-save-you-taxes/L7F...) mentioned that "A couple may pay the IRS less by filing separately when both spouses work and earn about the same amount.When they compare the tax due amount under both joint and separate filing statuses, they may discover that combining their earnings puts them into a higher tax bracket." But when I look at the tax bracket, the number of filling jointly is 2x the number of filling separately. So again, I can not find any difference filling jointly or separately. If spouse with similar income located in one bracket when filing separately, they will fall into the same tax bracket when filing jointly. 

Did I missed something in the calculation ?

thanks 

Married Filing Jointly or Qualifying Widow (Widower)

If taxable income is over—	but not over—	the tax is:
$0	$19,400	10% of the amount over $0
$19,400	$78,950	$1,940 plus 12% of the amount over $19,400
$78,950	$168,400	$9,086 plus 22% of the amount over $78,950
$168,400	$321,450	$28,765 plus 24% of the amount over $168,400
$321,450	$408,200	$65,497 plus 32% of the amount over $321,450
$408,200	$612,350	$93,257 plus 35% of the amount over $408,200
$612,350	no limit	$164,709 plus 37 % of the amount over $612,350

 

Married Filing Separately

If taxable income is over—	but not over—	the tax is:
$0	$9,700	10% of the amount over $0
$9,700	$39,475	$970 plus 12% of the amount over $9,700
$39,475	$84,200	$4,543 plus 22% of the amount over $39,475
$84,200	$160,725	$14382.50 plus 24% of the amount over $84,200
$160,725	$204,100	$32,748.50 plus 32% of the amount over $160,725
$204,100	$306,175	$46,628.50 plus 35% of the amount over $204,100
$306,175	no limit	$82,354.75 plus 37% of the amount over $306,175

[xmasbaby0]

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...

[zgunsmoke]

Hi, xmasbaby0:

         Thanks for replying my question. From your information, can I say that if we have no kids and both our income are only from W2, then filing jointly have no more tax benefit than filing separately except the convenience ? 

         From the "https://www.nytimes.com/interactive/2015/04/16/upshot/marriage-penalty-couples-income.html?_r=0&abt=...", It seems I will get marriage penalty when filing jointly (we both work and our salaries are almost the same). Also considering the turbo tax article I mention earlier which claimed that "A couple may pay the IRS less by filing separately when both spouses work and earn about the same amount.".

        That's the reason I raised my question.

thanks

[xmasbaby0]

You should compare doing your returns both ways since you are so unconvinced that joint might be better.  Remember to follow the rule about itemizing.   If one of you itemizes then you both must itemize---even if that results in one of you getting less than your standard deduction.

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.