Will it be better to file separately if husband earns $35k, and wife earns $160k? 2 dependents?

[xmasbaby0]

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...

[Mike9241]

with substantial differences in income, a joint return would most likely be the best option.  with a joint return it's like 2 people each having 1/2 of the taxable income which generally lowers the average effective tax rate.

certain credits are lost if MFS and certain other items are limited or not allowed at all. With MFs either both must itemize or both use the standard deduction.  However, the only way to know for sure is to prepare 3 returns 1 joint and then 1 for each of you using the MFS filing status. Online is not convenient for this since you'll likely need to pay for 3 returns to see the results. A desktop version would be cheaper provided your computer meets minimum system requirements.

https://turbotax.intuit.com/personal-taxes/cd-download/tta-system-requirements