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What-if Worksheet 'MFJ vs MFS', and capital gains/losses

Apologies for wordy message.   

A little background may help.   I recently stopped working and will have no future earned income.   My wife still has a high paying job.   I am thinking to transition investments from a joint brokerage account to my individual brokerage account thinking that this may be tax advantageous in the future.   Specifically, I'm thinking I could take future L.T. capital gains at a 0% CG rate rather than our current 20% rate + 3.8%NIIT.  I have always filed MFJ. 

I notice the "What-if Worksheet" and checked the "MFJ vs MFS" box to see the impact.   It suggests that we would save $2K on my last year's return if we filed as MFS.   This surprised me.   I also noticed that the worksheet split the  Net Long-term gains/losses equally between us even though we each also had separate brokerage accounts.   This did not make sense to me- I assume we split the Joint Brokerage account but not our individual accounts thus the numbers should not be evenly split.   

Does anyone have any experience where the What-If Worksheet could be less than accurate here?   The issue seems to come from the worksheets line 43b (Tax from Sch D or qual divs).

I appreciate that the best thing to do would be to run TT as MFJ, MFS(me), and MFS(spouse) and compare.   But this could take significant effort to get trades (etc.) into the application.   This brings on a second question: When filing MFS, can TT split Joint Brokerage accounts when importing from my broker?

Thanks in advance!

 

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1 Reply
ThomasM125
Expert Alumni

What-if Worksheet 'MFJ vs MFS', and capital gains/losses

You won't be able to split the joint bank accounts and have them downloaded separately into your separate tax returns. You would have to transition them into separately owned accounts to be able to download them and not have additional work adjusting them to reflect the portion applicable to your separate returns. As opposed to entering separate investment transactions when you do the mock return to see how much money you save filing as married-separate, you could manually allocate your total gains, interest and dividends and make one entry for each on your separate returns. You would just need to make sure the totals equal what you have listed on your Form 1040 in line 2 and 3 for interest and dividends, and on line 7 for your capital gains.

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