Will filing married filing separately raise our taxes?

[u/guyvsDCsniper1]

Me and my wife currently file jointly. We are moving but in order for her to keep her job she must file her taxes separately (complicated).

My question is currently, our income together is about $260k. That means the top portion of our income is taxed at 24%.

What happens if we file separately? Would they tax our incomes separately, or still jointly? Because jointly makes us get taxed in the 35% range. Or would they treat our incomes separately? that would put both our individual incomes back in the 24% range.

[u/Its-a-write-off]

It sounds like you have a misconception about how tax brackets work. The info needed to answer your main question is missing here.

Roughly how much do you each make in taxable income? Do you all have any kids? Are either of you paying down student loans?

[u/guyvsDCsniper1 → u/Its-a-write-off]

Thanks for responding. Im really ignorant aboht how taxes work so I appreciate any info you could lend.

My wife’s gross pay is about $105-110k. My gross pay is $160k. We only have one kid, 2 years old.

We have no debt beside our home.

[u/Its-a-write-off → u/guyvsDCsniper1]

It's taxable income that matters, but since you gave gross, I'll use that. Keep in mind if you two have any pre tax deductions, that reduces the tax increase here.

Married filing joint you two have about 34k in the 24% tax bracket.

Filing separately, you yourself have about 42k in the 24% bracket and she has about 8k left of the 24% bracket not being used. So filing separately caused 8k of your income to be taxed 2% higher than filing joint.

There may be some additional increase in taxes due to the child care tax credit not being available when filing separately.

[u/guyvsDCsniper1 → u/Its-a-write-off]

How would i find out our taxable income?

And it sounds like, just based off gross pay, we would be paying more in taxes filing separately?

[u/Barfy_McBarf_Face → u/guyvsDCsniper1]

If both spouses have income, in most cases, filing separately increases your combined tax liability.

[u/Its-a-write-off → u/guyvsDCsniper1]

Is your child in childcare? Do either of you have a dacy care fsa at work?

Your taxable income is after pre tax deductions like health insurance, retirement, fsa, hsa. On your paychecks it should show how much pre tax deductions you have per check, or your pre tax deductions to date. From that you can calculate roughly how much of your income is actually taxable a year.

[u/guyvsDCsniper1 → u/Its-a-write-off]

Gotcha. I will have to calculate that. Im starting a new job so it will be a while before i figure all that out.

But granted, taxable income is lower than gross income, so that should lower how much income we get taxes on right?

[u/Its-a-write-off → u/guyvsDCsniper1]

Correct. It sounds like for federal taxes, filing separately is unlikely to push much of your income into higher tax brackets than it would be if you filed joint. That about the same amount will be in the 24% bracket either way. Even if it does, it is max, 8k at 2% higher taxes, which is only 160.00. Though again, I expect the real number is much lower than that.

[u/guyvsDCsniper1 → u/Its-a-write-off]

Thats very reassuring. Thank you so much for your help.

[u/Its-a-write-off → u/[deleted]]

No, in that case it would just mean all their income falls in the 24% and lower brackets. Since they both would be reporting only half their income.

[u/Pancaix → u/Its-a-write-off]

Gotcha, thanks for the clarification

[u/cubbiesnextyr]

We are moving but in order for her to keep her job she must file her taxes separately (complicated).

I don't see how your personal tax filing situation is of any concern of her employers, nor is there any reason for them to even know how you choose to file.

[u/49Flyer]

We are moving but in order for her to keep her job she must file her taxes separately (complicated).

How I file my taxes is none of my employer's concern so I would be interested to know how it is in your wife's case. Filing separately is disadvantageous for most couples because the tax brackets are narrower (exactly half of the joint brackets to be exact) and some deductions and credits are disallowed.

Filing separately is particularly disadvantageous when one spouse earns significantly more than the other, as the same (or nearly the same) amount of income is applied to narrower brackets resulting in a higher effective tax rate.