My wife (US citizen) works for the World Bank and since it’s an international institution, she does not get her payroll taxes taken out of her paycheck. She has to make estimated tax payments each quarter based on what she thinks her tax responsibility is. The world bank does provide her with an allowance at the beginning of the year to help offset those tax payments.
I have a traditional employment (higher income) with a 401k, HSA and 1099-INTs for a few HYSAs. Before I got married, I have never owed during tax season and have almost always received a refund being able to itemize a sizable deduction. Now that we are filing jointly, because of my wife’s estimated tax payments, my accountant said it might not be in our interest to file joint since we’d owe significantly mostly due to her not quite paying all the tax payments in the year. He instead told us to consider filing married but separate so that my deductions would not get watered down by her tax liability.
This makes sense to me but wanted to get others’ thoughts. It definitely seems like even if she’s off by 5-10% on her quarterly estimated tax payments, all the things I do to keep my tax burden down like charitable contributions, retirement contributions, HSA, etc. are kind of moot since we’d be owing so much. We have one son and a mortgage together so how would filing separate work, I assume those joint deductions like mortgage and dependent are just split 50-50 between us?
Is this an instance where filing Married Jointly is not better?
byu/tcrowne33 intax
Posted by tcrowne33
4 Comments
Make larger estimated tax payments
Are you in a community property state?
Ultimately you should be looking at your total tax burden, not whether you get a refund. You can make larger estimated payments if your concern is owing taxes.
There’s nothing here that obviously indicates MFS would be better, but if your accountant thinks it might then they should be calculating it both ways and preparing whichever one is better.
That doesn’t make sense. Money is fungible.
If you’d get a 3k refund filing separately, and she would owe 4k filing separately, but filing joint you two owe 500.00 it’s still better to file joint.
She’s not watering down the value of your deductions. You still get the full value of your deductions. Because they lower tax liability.
Very rare these days