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February 8, 2022
Question

My husband and I file separately. He makes over twice what I do yet pays much less in taxes. I am a 1099 contractor but I feel my taxes are much too high. Any advice?

  • February 8, 2022
  • 2 replies
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2 replies

Employee
February 8, 2022

If you are an independent contractor then you must pay self-employment tax for Social Security and Medicare as well as ordinary income tax.   You can enter your business expenses on your Schedule C.

 

Maybe the real problem is that you are filing separate returns.   Why are you filing that way?  MFS is usually the worst way to file.  You could be filing a joint return even if one of you is self-employed and the other is a W-2 employee.

 

If you were legally married at the end of 2021 your filing choices are married filing jointly or married filing separately.

Married Filing Jointly is usually better, even if one spouse had little or no income. When you file a joint return, you and your spouse will get the married filing jointly standard deduction of $25,100 (+$1350 for each spouse 65 or older)  You are eligible for more credits including education credits, earned income credit, child and dependent care credit, and a larger income limit to receive the child tax credit. 

 

If you choose to file married filing separately, both spouses have to file the same way—either you both itemize or you both use standard deduction. Your tax rate will be higher than on a joint return. Some of the special rules for filing separately include: you cannot get earned income credit, education credits, adoption credits, or deductions for student loan interest. A higher percent of your Social Security benefits may be taxable. Your limit for SALT (state and local taxes and sales tax) will be only $5000 per spouse. In many cases you will not be able to take the child and dependent care credit. The amount you can contribute to a retirement account will be affected. If you live in a community property state, you will be required to provide additional information regarding your spouse’s income. ( Community property states:  AZ, CA, ID, LA, NV, NM, TX, WA, WI)

 If  you are using online TurboTax to prepare your returns, you will need to prepare two separate returns and pay twice.

 

https://ttlc.intuit.com/questions/1894449-married-filing-jointly-vs-married-filing-separately

https://ttlc.intuit.com/questions/1901162-married-filing-separately-in-community-property-states

https://ttlc.intuit.com/questions/1894449-is-it-better-for-a-married-couple-to-file-jointly-or-separately

 

 

It is not easy to compare MFJ to MFS using online TT but you can do it.  Since you only get one return for each account and user ID, you have to use 3 accounts and user ID’s—one for MFJ and two for each of the MFS returns.  Compare, choose, and file—and pay—accordingly.

It is much easier to do this comparison using the desktop version of TT installed from a CD or downloaded to your own computer.  You pay once for the software and you can prepare multiple returns easily, and it has a “what if” feature that allows comparisons.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
Employee
February 8, 2022

No one could answer your question without comparing both tax returns side by side.  Try printing them out and doing that yourself.  You are subject to income tax and self-employment on your net profit.  Maybe your spouse has more expenses, that reduce his net profit.  Maybe your spouse is getting tax credits for claiming your children as dependents instead of you.  Maybe your spouse is cheating and listing false or excessive expenses or not reporting all their income?  Only you can know, or take your returns to a local professional.