Coincidentally my refund is getting lower if i include my spouse W2. Havent seen this happening before.
Yes you include all income on a joint return. She didn't have enough taxes withheld.
That's common. It just looks that way because you put them in as separate W2s and saw the tax due change in between them. If it all was on one W2 you would get the same answer. And each job was withholding like it was your only job.
Because you only get one standard deduction no matter how many W2s you put in. Turbo Tax starts out by giving you the Standard Deduction. You entered more income when you entered the second W2 but you didn't enter more deductions. And each job only withheld taxes like it was your only job for the year. You might want to adjust your withholding. Also as you add more income you might not be getting as many credits as before like the EIC credit. And it was probably giving you the EIC credit until you went over.
Yes you include all income on a joint return. She didn't have enough taxes withheld.
That's common. It just looks that way because you put them in as separate W2s and saw the tax due change in between them. If it all was on one W2 you would get the same answer. And each job was withholding like it was your only job.
Because you only get one standard deduction no matter how many W2s you put in. Turbo Tax starts out by giving you the Standard Deduction. You entered more income when you entered the second W2 but you didn't enter more deductions. And each job only withheld taxes like it was your only job for the year. You might want to adjust your withholding. Also as you add more income you might not be getting as many credits as before like the EIC credit. And it was probably giving you the EIC credit until you went over.
Your spouse's income should be included under wages, salaries, tips etc. as she was issued a W-2.
Yes, your refund will be smaller as you are adding her earnings to your ordinary income.
If you are filing "married filing jointly", you must included all income and deductions for both of you. So yes, you must include her W2.
You could try it both ways, put in the information to file separately and see how much you owe. I hope this is helpful.
As mentioned by @BrigiMario, if you choose to file a joint return you cannot pick and choose which income to include. All income must be included.
If she files a separate return and has taxes withheld, as long as you are not taking an itemized deduction, she would get a full refund of everything she had withheld for federal (state laws vary)
When you file separate you make be disqualified for certain tax credits, but running it both ways first is the best way to figure out which way you should file.
You can switch back and forth each year.
Thanks for the answer. Can I just not submit her W2 since the earnings are below $12550? Should I submit as Head of household in that case? I've 3 children as dependents though. Not sure what happened what taxes were withheld during her pay but some amount is being deducted from the refund now when I try to file. I have never seen this happening before.
what would be the best filing status this time. I'm not sure why refund is getting lower with her W2. her income was low. If i file as head of household can i skip her W2?
When you add her income, you get more taxable income. She may have had no taxes withheld (look at box 2 of her W2) or she may have had very little withheld. When you combine both incomes, her income would be taxed at your rate instead of the rate for someone making less than $12,550. If she is still working then she needs to change her W4 so that they would withhold taxes at the rate of your incomes combined instead of at her lower rate.
If you are married and living together, you cannot file as head of household. Your only options are married filing jointly and married filing separate. You cannot claim a spouse as a dependent.
You can claim your 3 kids on your return and she can file her own return without claiming the kids but you would be filing as married filing separate not head of household.
@chinnapparaju75- Sorry no you can not ignore her W2 because it is under 12,550. That is for a Single person. For Married Joint the amount is 25,100 for your combined income. So if the income for one or both of you is over 25,100 then you have to report all the income together. She didn't have enough tax withholding taken out.
Yes.
Your refund amount will change because her income adds to the Gross earnings of the household, and that changes the amount of taxes you owe.
If you don't report her income from that calendar year, you are committing tax evasion, which is illegal.
Good luck.
KJ-san
A very common thing that has happened to me is that your income tax rate is higher than hers. So when you add her income and that income was not withheld at the higher rate you see a decrease in your refund. This is especially true if her income would have had a very low withholding based on her income alone.
@VolvoGirl I've filed for an extension. Will clear all my queries with a tax professional before filing again. Thanks for your inputs