Generally, filing jointly will give you a bigger refund or less taxes due. When you file separately, your tax rate is higher and you won't be able to claim:
- Education benefits
- Earned Income Credit (EIC)
- Child and Dependent Care Credit (usually)
- Adoption Credit (usually)
- The same benefit married filing jointly couples get for itemized deductions, the Child Tax Credit, and capital losses (all of these deductions are reduced by half)
- The standard deduction if your spouse is claiming itemized deductions
On top of that, if you live in the community property states of Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin, you have to deal with community property allocations and adjustments, which adds extra work and complexity to your tax preparation chores.
Tip: Only taxpayers who were still legally married as of December 31, 2020 are able to file as married, whether jointly or separately.
Filing jointly means you file one tax return. When filing separately, you file two tax returns.
- How can we compare married filing jointly with married filing separately?
- Can a married person claim Head of Household filing status?
- What are the qualifications for the Earned Income Credit (EIC or EITC)?
- What is an innocent spouse and how does it differ from an injured spouse?
- What is the Child and Dependent Care Credit?
For additional information, please refer to the following link:
If your joint AGI, excluding your unemployment income, is less than $150,000, you will almost certainly be better off filing jointly, as gloriah5200 has described. However, for 2020 only, if your joint AGI, excluding your unemployment income, is $150,000 or more, there is a possibility that filing separately will work out better if it allows you to claim the $10,200 unemployment exclusion. That would only be possible if your AGI, excluding your unemployment income, on your separate return is less than $150,000. The only way to be sure which way is better is to prepare tax returns both ways and see which way works out better overall. Be sure to take into consideration state taxes as well as federal.
Doing the comparison with TurboTax Online is difficult and clumsy. If your income is in the range where filing separately might be advantageous, you should consider using the CD/Download TurboTax software instead of TurboTax Online.
One point that gloriah5200 mentioned is worth emphasizing. If you file as married filing separately, essentially you must either both itemize deductions or both use the standard deduction. You cannot have one of you itemize and the other claim the standard deduction.
96% of married couples file joint - because the tax rules motivate that behavior. the remaining 4% typically can't 'get their act' together; it is quite unusual for a tax situation to occur that motives separate filing.
HOWEVER, this unemployment situation does create a unique situation as well described above. i