Marriage Tax Penalty on Social Security wish I knew earlier

[Dave J]

EDIT: After I posted this and doing more research, I see the IRS has effectively closed this possible loophole by requiring anyone filing married separately to report as taxable 85% of all SS income. Slams the door shut.

I am leaving my original post so anyone seeing it and revisiting can see it.


Original Post......
So I got an email yesterday from Money Talk New with the following article. https://www.moneytalksnews.com/slid...income&utm_source=newsletter&utm_medium=email


I do my own taxes and have never run across an article that called out this possibility. I just did a back of envelope test and I overpaid my 2023 taxes by $1494 by filing married filing jointly. When I run it as married filing separately the total is that much less because so much more of our SS is not taxed. I can also file amended for my 2022 and 2021 returns and save, but have not done that math yet.(EDIT: I just read I can not change past years from Married joint to married separate after the tax return due date, so I can only change this years return, I guess) My 2020 return had more income and I don't believe it would help for that year. I guess from reading I can file amended for 3 years from date return was actually filed. I have not figured the difference in my Missouri returns yet but think it will be small as they don't tax social security on my level of income.


How many here with lower incomes beside social security file married filing separately? If you don't you may want to look at that. There may be something I'm not seeing but curious what comments I will get before I actually do my amended returns.

 

[pb4uski]

Opposite for us. If in 2024 we file MFS our tax would be 169% of what it would be MFJ because most of the income is my income (Roth conversions, my pension, income from my inherited brokerage account and her income is only SS and interest from our joint accounts. I'm not collecting SS yet either. Sounds like it is highly situational.

Same thing once I start collecting SS... but only 114% of MFJ if we filed separately.

 

[Dave J]

I can find no way to edit or delete my post. The article I linked is misleading, because if you file married filing separate ALL your Social Security (85%)is added to your taxable income,and you are not able to use the calculator in the worksheet.

 

[Midpack]

Haven’t started SS yet, but not sure how we’d file separately with a big chunk of our (passive) income from joint accounts? I assume tax code dictates 50/50.

 

[Dave J]

Haven’t started SS yet, but not sure how we’d file separately with a big chunk of our (passive) income from joint accounts? I assume tax code dictates 50/50.

I think that is how it is handled. I found out the article I posted is misleading, as they (IRS)have a clause that closes that loophole by making you pay 85% of ALL you SS if you file married separately.The article did not address that. Wish I could edit my post, but that button has gone away.

 

[Gumby]

Try editing now.

 

[Dave J]

try editing now.

Thanks!