So, as of last fall, I lost my trusty “Single” filing status (honeymoon photos), and am now working on taxes having to pick one of the other two statuses. At the moment I’ve done out the work with Married Filing Separately, and Married Filing Jointly, and Separately comes out a little ahead (or behind, if you imagine it from the government’s perspective).
I’ve always read that filing jointly was Almost Always Better, for some reasons, some of which don’t apply to us (e.g. we both made about the same amount of $$$ last year so we aren’t going to get a lower bracket by combining). Are there more esoteric reasons why we’d want to do Jointly instead of Separately, that wouldn’t be obvious? Things that I might be forgetting about to make Jointly better in spite of everything?
A common mistake that people make when doing this type of calculation is using the standard deduction for one spouse and itemizing for the other spouse. You have to choose one or the other for both spouses on your federal returns. (I don’t know about the NY or CT returns.)
Ohio is famous for a quirk in its state tax laws that for some couples results in a benefit from filing their federal tax returns separately. Ohio requires couples to use the same filing status on their state and federal returns, but separate filers often save enough on their state taxes to make up for the extra federal taxes they pay. Again, I don’t know if anything like this is at play in your state.
By “done out the work” do you mean by hand or with software that does calculations for you and determines eligibility for certain things? Because the chance of missing something is much greater for the former; and the one Alley Dweller mentions is a big one that is easy to miss if you aren’t aware of it. Even software will probably add a warning that is easy to ignore.
This is separate from the so-called “marriage penalty” as well - MFS is almost always the worst situation; this term refers to single vs. MFJ. Maybe you stumbled on one of the exceptions where MFS is better, but be diligent!
Nope, and nope. We both have green cards already, and neither of us have student loans.
[QUOTE=Alley Dweller]
A common mistake that people make when doing this type of calculation is using the standard deduction for one spouse and itemizing for the other spouse. You have to choose one or the other for both spouses on your federal returns. (I don’t know about the NY or CT returns.)
[/QUOTE]
The tax software pointed this out to us (and neither of us itemize anyway).
One complication we do have is that we live in NY, but Spouse B actually works in CT, so CT wants their cut, and so does NY. It seems like CT says, “pay tax on the money actually earned in CT”, while NY says, “pay tax on everything, but we’ll give you a credit for the tax you already paid to CT”.
[QUOTE=thelurkinghorror]
By “done out the work” do you mean by hand or with software that does calculations for you and determines eligibility for certain things? Because the chance of missing something is much greater for the former; and the one Alley Dweller mentions is a big one that is easy to miss if you aren’t aware of it. Even software will probably add a warning that is easy to ignore.
[/QUOTE]
Yeah, “done out the work” means “typed it into the software twice”.
That’s why I made a point to ask (well, that and as an excuse to show off the honeymoon photos). I hear that MFS is nearly always the worst, so when the numbers came out better for MFS, I was suspicious. But the concrete reason they give for why MFJ is better is because you have a “Ward and June Cleaver” marriage where one person brings home all of the bacon and can get into the tax bracket of someone who makes half as much by filing jointly, and that doesn’t apply to us.
