Spouse retired this year in January and has a low SS (18k), is worried he will pay taxes if we file jointly, my income is around 110k, we live in NYC, no kids. From what I read it seems it is always best to file jointly but I can’t find a straight answer for how it would impact low SS “that’s under the taxable limit”. Any advice on this?
Spouse on SS (18K), I am still active with higher income, should we file separately?
byu/sheridansq2004 intax
Posted by sheridansq2004
3 Comments
Well it depends how you account for it, I suppose. Note that filing separately changes the calculation for untaxed social security so what he is assuming will work won’t work like that.
If the 18k is all his income, then even if you file jointly, half the standard deduction can be attributed to him, which is at least 15,750 and maybe more if you are over 65.
And then all your income would be taxed at a lower bracket.
So it’s extremely likely that your combined taxes would be higher if you both file separately. Filing jointly is precisely to help couples where one spouse accounts for the majority of the income.
It might be possible that he might see ‘his’ taxes going up slightly, but then to not also recognize that ‘your’ taxes go down much more significantly would be weird.
The lower tax rate you get for your income will likely outweigh the increased amount of his income being subject to tax, but you can run it both ways and see which comes out better overall.
Looking just at your own income (ignoring Social Security for a moment) you’d pay $16,000 of federal income tax by filing separately, and $9,000 by filing jointly. So filing jointly saves you $7,000.
But he’s right that filing jointly does make that Social Security income taxable. That costs you about $1,800.
So you pay $1,800 to save $7,000. Even if it’s deeply important to you to keep “his” tax separate from “your” tax, maybe consider paying him $1,800 in cash to let you file jointly. That’s still a better deal.
To be fair, that’s a quick analysis without all the facts, so the real answer is always: prepare your tax returns both ways and file whichever one is better. Maybe something else about your situation makes it advantageous to file separately, in which case you should do that. Just remember to look at the total amount of tax you’re paying, as that’s really the only number that matters.