Return is lower when filing jointly with spouse

[payam]

This is my first time filing taxes with my spouse jointly. However, I noticed that the return went down by about 70% as soon as I included my spouse’s income. Is that ok? Our joint incomes are still well below $200k a year.

I have always heard filing jointly will be best but in my case is affecting the return by a big amount. 

Is it better to file separately?

[VolvoGirl · Accepted solution]

Did you get married in 2022 or did you file Married filing Separate last year?  Joint is usually better than 2 MFS returns.

Here's some things to consider about filing separately……

In the first place you each have to file a separate return, so that's two returns.  And if you are using the Online version that means using 2 accounts and paying the fees twice.  

Many people think they come out better when filing Married Filing Separate but they are probably doing it wrong.  If one person itemizes deductions on Schedule A then the other one must itemize too, even if it's less than the standard deduction, even if it is ZERO!  And if you are in a Community Property state it can be complicated to figure out.

And there are several credits you can't take when filing separately, like the

EITC Earned Income Tax Credit

Child Care Credit

Educational Deductions and Credits

And contributions to IRA and ROTH IRA are limited when you file MFS.

Also if you file Married Filing Separately up to 85`% of your Social Security becomes taxable right away even with zero other income.

See …….

https://ttlc.intuit.com/community/married/help/is-it-better-for-a-married-couple-to-file-jointly-or-...

To compare Joint to MFS.  If you are using the Online version, do NOT change anything on your return.  You would have to start with a new account and do a test return.  You don't have to pay unless you want to print it out.  So you might need 3 accounts, one for Joint and two MFS, one for each spouse.

How to Compare Joint to Married Filing Separately

https://ttlc.intuit.com/community/married/help/how-can-we-compare-married-filing-jointly-with-marrie...

How to start another return in the Online version

https://ttlc.intuit.com/community/using-turbotax/help/how-do-i-start-another-return-in-turbotax-onli...

[xmasbaby0]

WHY DID MY REFUND GO DOWN WHEN I ADDED ANOTHER W-2?

You started off with your first W-2 and your refund looked high?  Then you added another W-2 and it stopped looking so good? That is normal.  When you added more income, your tax liability increased, so you saw your refund decrease.  The program began by giving you your standard deduction—- which lowered your taxable income.  (if you are filing joint it took $25,900 off your income right off the bat)   So you are not being taxed on as much of the income on that first W-2.  Then you added taxable income--so the refund went down. Your refund (or tax due) is based on the total of your income, not “per W-2.”  

And…adding income may affect other credits you were getting like the earned income credit.

Wait until you have entered ALL of your income and credit/deduction information.  You can't really tell anything until it is all entered.  That “refund monitor” does not mean anything until everything has been entered.

https://ttlc.intuit.com/questions/2273878-why-did-my-refund-drop-when-i-entered-another-w-2

[payam]

Thank you. This "What-if worksheet" is very useful. It turns out my spouse even owes taxes so that is why!