Are there any rough guidelines for when married filing jointly is better/worse than married filing separately? (this is our first tax season after marriage)
I started doing MFJ in TurboTax, and first filled out my own stuff, and was on track for a large federal refund (because I paid estimated taxes based on 2021 crypto earnings, while my actual 2022 crypto earnings were substantially smaller). Then I add in my wife’s W-2 and the projected federal refund drops by, like, $35k, presumably because adding her income in as marginal income after mine makes it all taxed at high rates while her withholding was probably based on presumed lower rates.
That seems bad! Would MFS result in her having a more normal tax burden and potentially save us most of that $35k?
It’s usually better to file jointly. The refund probably drops because your withholding was setup by your employer(s) without knowing about the partners incomes so the withholding is off.
This was a problem for me and my wife when she was working. She worked part time so she made like 25k for the year but it was withheld as if our household income was 25k the first year she worked. In reality, it needed to be withheld as if it was the last 25k of our 85k income.
Yeah, it’s probably that MrsGoofy wasn’t withholding all that much, while you were withholding “too much” (but actually about enough in practice). I think you can compare MFS and MFJ within TurboTax without too much trouble, but I don’t think you’re going to find MFS is a win (or if it is, it’s probably not a big one). Turbo Tax may even be doing this for you automatically, so if it isn’t saying to switch, it’s probably a loss.
We have it set up such that my checks get rekt due to paying for our taxes and benefits while MrsWookie’s checks are the money we pocket, but we merge our finances and don’t end up worrying about whose money is whose. I realize that doesn’t work for everyone, but that’s how we’ve worked it out. It sounds like a similar setup may be easy for you to implement considering the current state of things, but I’m not going to look askance if you want to choose to up your wife’s withholding and lower yours even if the net result is the same.
I dunno. Like looking at this site and comparing against her W-2 I would guess her federal withholding was a few thousand less than she needed (if we did MFS, for MFJ she was actually just about right), so if the situations are roughly…
MFS: I file and get $X refund, she files and pays a few $K
MFJ: we file together and get $(X - 35000) refund
the MFJ one seems significantly worse, unless there’s other ways MFS comes around to bite you? Are there?
Actually, yeah, fiddling with TT a little more and I think this is the case. If I switch my return back to MFS and delete her W-2, then the refund doesn’t actually go back up. So the $35k was just a phantom thing that only appeared between switching to MFJ and actually entering my wife’s info.
I’ve always thought it was really dumb that TurboTax keeps a ticker up of refund even when it knows it has incomplete info. Like I get the concept but if they really want to do it they should at least confirm your done entering incomes and run the ticker while your putting in deductions
I don’t hate it like you, but I agree it has its oddities. The stupidest one imo, is for my HSA. After entering my W2, it knows I have an HSA, but then there’s a separate HSA question, where you confirm how much you contributed to your HSA. And then your tax bill skyrockets (or refund tanks, depending which side you’re on). And then it asks if you only spent HSA money on approved health expenses that year. And then the number goes right back to where it was.
Congrats on marriage. My only advice is to run your stuff through multiple online sites and obv pick the best. Mine always changes between them, and I have no idea why, my income isn’t all that interesting. At least try 2.
Man between the various home related insurances, car insurance, health insurance, dental, life insurance, etc makes it kinda feel like might as well just forget it all YOLO with plan to impose yourself on some relatives if anything bad ever happened. So much insurance.
I cannot wait to be rich enough to never pay another penny for insurance again. Seriously I will self insure everything. My healthcare costs were way lower when I didn’t have insurance (but did have money) than they are now.
It was a nice feeling being able to drop my term life insurance about 10 years ago and then my private disability insurance last year when I knew I’d be semi-retiring. I can’t imagine going without health insurance no matter how solvent I feel.
I was actually wondering about this, let’s say had like a 25yr policy. If you getting towards the second half of policy wonder if actually is +EV to keep paying because your actuarial risk of death/disability at that point is probably a lot higher than represented by your current premium.
Like if you went out and bought a new 5 year policy I imagine the premium would be way higher than the current.
Granted having money while alive is much more useful than having it when dead so EV not the only consideration lol
Probably have to have a pretty huge net worth to self-insure on healthcare, when costs of some rare diseases or serious problems can run seven figures a year over the long term.
They don’t run that if you’re paying cash. That’s what I learned self paying. There’s pretty much always a much better no insurance cash price available if you ask around.
The entire healthcare system is designed to extract as much money from you as it possibly can. At the same time insurance companies are a huge pain to deal with but aren’t very cost sensitive (their primary form of cost control seems to be denying claims from what I’ve seen). Many many many medical providers will charge you something at least a bit more sane if you offer to pay with American Express instead of Humana.
When I dropped my term insurance, I was divorced and my kids were out of college. Since at that point they were already set to inherit from me an estate in the mid six figures, I didn’t see the need to continue spending extra money so that they could double their windfall if I died
My goal is to get to retirement age. Both my term policies are setup to expire then. I might need to get something to prevent any long term conflict between the kids and my wife (not their mom). Right now one policy is for them and one for her.
Wife and I have been lazy and never got around to making a will. Local lawyer had quoted us $1500 like 2 years ago so I’m sure more now. Is quicken willmaker a reasonable option?
Really we just need the basic setup for setting stuff up for kids if we both died. We don’t have any sort of noteworthy assets outside normal house/retirement/life insurance
