2022 Filing Status and Social Security

[eywriter]

My wife and I are close to applying for our individual Social Security benefits; is there any advantage of filing our taxes separately or should continue to file jointly?

[xmasbaby0 · Accepted solution]

Joint returns are almost always better.   If you file separate returns all of your SS can be taxable.  

If you were legally married at the end of 2021 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 $25,100 (+$1350 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...

[SoCalGal22 · Accepted solution]

Thank you for asking this question about Filing status.

Usually you would still do better filing Married Filing Jointly, but here is a more in-depth look at different reason why Married Filing Separately works better.  

https://turbotax.intuit.com/tax-tips/marriage/should-you-and-your-spouse-file-taxes-jointly-or-separ...

It is important to know that if you file MFS and one of you itemizes, then both of you have to itemize.  No Standard Deduction is allowed then.  

I hope that answers your question about gift tax and reporting. Please feel free to give TurboTax a call anytime if you have additional questions or need assistance.

Have a great day!