MFS or MFJ Selection

[peonycat]

I was trying to figure out what is the proper filing status for 2021. I downloaded Turbotax Desktop version, entered the info and looked at the What-if worksheet. However, it does not provide me with useful information since it just allocated 50% of the investment income to each taxpayers if MFS. I am wondering how to get the investment income to go to the corresponding person on the worksheet. Does anyone have any experience?

Also, what if I finally decide to do MFS, should I create two separate returns for both taxpayers? 

[VolvoGirl]

Yes Married filing Separate is 2 returns.   You have to do each return separately.  So start a new return.

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-...

[peonycat]

Hello, thanks for the answer. I want to provide you with some more information here:

I am using the desktop version. My husband's income is a lot higher than mine (his tax rate bracket is 32% and mine is just 22%). If I file separately, I would be able to get back the $1400 credit myself (we did not get the 3rd stimulus check because of filing jointly for 2020). However if we file jointly we will fall into 24% probably, but I am still curious regarding how much the difference would end up, since $1400 is a big number.

That is why I tried to get an accurate comparison to see what the outcome would be if we choose to file separately for 2021. We don't itemize nor we have any other kinds of credits so those won't be an issue when it comes to the final decision.

My problem here is that:

1. The what-if worksheet equally split the investment income between the two of us. But I want mine to just be what's on my 1099-B and his just be his. I don't know how Turbotax can do so. Otherwise I have to prepare 3 returns, one MFJ, one MFS for me and one MFS for him to do the comparison. It is a lot more time-consuming this way.

2. If we are going to file separate returns, how Turbotax would know how to prepare the form 2210 for him since his company did not withhold enough for him. 

Thanks!