My wife makes significantly less money than I do (11K vs 70K). Would filing separately or jointly be best for her? And I do mean what's best for her. Not both, just her.

[cbowman1729]

Just please take me seriously when I say that I'm looking for what is the best deal for HER is. It's not about what makes the most sense for both of us, just her.

[xmasbaby0]

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.

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...

[cbowman1729]

Thank you for the response but it kind of avoids the most important aspect of the question, which is to ask specifically what is best for her alone.  What's best for her might end up being worse for me, but I'm ok with that.  So I specifically don't care if filing jointly is better for the "couple".  What is the best situation for her?  Though I understand if there's no good answer to that question.  

[DianeW777]

The following examples are simple and based on earned income versus any other type such as interest, dividends, or other investment income.

If you itemize deductions then she is forced to do the same which means if she has no deductions her deduction is zero, in other words she is not allowed to take the standard deduction. This is specifically a rule for MFS filing status.

• If we use the income you provided for her of $11,000 and assume you will itemize here tax liability will be $1,126. This is a straight tax table rate without knowing what type of income she has or if she has any tax paid in through withholding or estimated tax.
  • If you both use standard deduction ($12,400 for MFS) her tax would be zero.
• If you file jointly, just using the standard deduction since itemized deductions are unknown the tax varies as shown below.
  • Just your income MFS:  $8,468
  • Both Incomes MFJ: $6362
    • $1,126 + $8,468 = $9,594 (combined separate tax) - $6,362 = $3,232 overall tax savings if using MFJ

As you can see, there is a vast difference in filing separately vs jointly.  Married filing separately does have other penalties than what is mentioned here.  The best for her may be filing jointly and giving her any difference saved by filing jointly since that is your utmost concern.

• To see the advantages and disadvantages of MFJ and MFS, use the hyperlink.

[cbowman1729]

Okay, but what if I don't itemize?  I would probably just take the standard deduction, so what does that do for her if we file separately?  Again, I am looking to maximize HER outcome, not my own.  

Nevermind.  I read it too quickly.  I see that part of your response now.

My apoligies.

[xmasbaby0]

Not sure how anyone can make it more clear for you.   If you prepare the MFS return for her and see the result---then compare it to the result of a MFJ return----do the math.  If you file MFS you can let her take all the itemized deductions if you choose to.   (Then you will not get any deductions and will even lose your own standard deduction--but you say that is okay with you.....)