choosing married separately vs joint

[divad1]

Hello.  How does one assess in TT if it is better to file married jointly or separately? Person was single in '22 and got married in '23.  When I do the return and note I was married at Dec '23, TT does advise which status is better, but that status is just for me. Do I need to create a return for my spouse as married separately and then compare the taxes due on it PLUS what my taxes would be if I file married separately to the taxes that will be due on just my return with a married joint status? Thanks. 

[xmasbaby0 · Accepted solution]

If you were legally married at the end of 2023 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 $27,700 (+$1500 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 since with online, you get one return per fee.

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...

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.

WHAT IF…?

If you are using Desktop software:

https://ttlc.intuit.com/questions/2895312-how-can-we-compare-married-filing-jointly-with-married-fil...

[divad1]

Hello and thanks for the guidance! Very helpful. I reviewed the What if feature and the MFJ vs MJS option. I see that TT initially allocated all non wage income, like interest, div, cap gains, and other items like student loan interest paid 50% / 50%, though would it be more accurate and correct to allocate those items based on who's name on the Form 1099 appears? 

Also, if one does file two separate returns for each person, do all the other person's wage, income, and other income, deduction, or credit items need to be input into each return?  And if so,  it would seem that the amounts would then be taxed in both individual's returns. Can you please advise and explain? 

Thanks very much.

[xmasbaby0]

You have not mentioned whether you are in a community property state.  It gets complicated in those states--you have to split it all 50-50.

  AZ, CA, ID, LA, NV, NM, TX, WA, WI

If you are not in a community property state then you split up the deductions in whatever way the two of you agree upon if you are itemizing.  You just cannot double dip or claim more than a grand total of 100% of the deduction.  If you file MFS--you both have to itemize  --- even if itemizing is a disadvantage to one of you----or both have to use standard deduction.

If you are not in a community property state each of you only puts your own income, etc. on your return.

[divad1]

Hello and thanks for the quick response. My apologies. 

The State is New York. I see in the What if worksheet that wages and w/o taxes were allocated by person, but all other income and deduction items seemed to be split.  I went in and changed the allocations to reflect actual ownership. 

That said, in TT, would one put a spouse's figures into his return and vice versa if both are filing married separately? And if they did include each others' amounts in each's return, would the income amounts be taxed twice, in each return?

Thanks again!

[wheezzy69]

I intend to file jointly when taxes are done, however, I want more taxes taken out of my paycheck so as not to owe in. so I typically on my w4 choose married filing separately. Is this a good option to continue to do? 

[xmasbaby0]

@wheezzy69 Your W-4 goes to your employer; it does not go to the IRS.   The information you put on your W-4 tells your employer how much tax to withhold, but it does not dictate how you have to file your tax return or dictate the filing status you must enter on your tax return.   There is another option on your W-4 that you can use if you want to---which is to have an extra amount withheld from each paycheck.  See Step 4  (c) .

https://turbotax.intuit.com/tax-tools/calculators/w4/ 

https://www.irs.gov/individuals/tax-withholding-estimator

https://www.irs.gov/pub/irs-pdf/fw4.pdf

[wheezzy69]

that does not really answer my question. I understand that the W$ is for my employer, what i ant to know is....Does choosing married filing separately take more takes out of each paycheck than choosing married filing jointly?

[DoninGA]

Changing from Married Filing Jointly to Married Filing Separately will increase the amount of taxes withheld on your income.  The tax rate brackets are lower when filing separately.

Go to this website for the 2024 and 2025 tax brackets - https://www.bankrate.com/taxes/tax-brackets/#tax-bracket-2024

[VolvoGirl]

Yes.  And the W4 you give to your employer doesn’t have to match how you file on your tax return.  I’m married and when I worked I claimed Single to have more withholding taken out, plus an extra amount.