Confused why CashApp shows Married Filing Separate gives better refund than Married Filing Joint?
I always thought married filing jointly (MFJ) was automatically better than married filing separately (MFS), but I'm seeing something weird with our taxes in CashApp. When we run the numbers both ways (we itemize), MFS is actually giving us a bigger refund. Here's our situation: I make about $270k total ($240k salary + bonuses + stock compensation, $9k interest from high-yield savings and T-bills, and $21k in capital gains) My wife makes around $125k total ($115k salary plus about $10k in interest from savings accounts and treasury bills) Our deductions include roughly $45k in mortgage interest and about $7k in property taxes (split 75/25 between us based on income). We have some smaller charitable donations too. We both have student loans but our income is too high for the interest deductions. When we calculate MFJ with itemized deductions, we end up owing about $7k at year end ($8.5k federal tax owed, but we get back around $1.5k in state taxes) But with MFS and itemized deductions, we only owe about $5k total ($8k federal with a much bigger state refund of around $3k) Is this normal? I'm confused because everyone says MFJ is always better, but we're getting a significantly larger state tax refund with MFS. What am I missing here?
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Vera Visnjic
This definitely isn't typical, but it's not impossible. The conventional wisdom that MFJ is always better applies to federal taxes, but state taxes can sometimes create exceptions to the rule. What state do you live in? Some states have unusual tax structures that can create this scenario. For example, states with high tax rates and generous deductions or credits might create situations where MFS works out better overall when you combine federal and state calculations. I'd recommend double-checking your calculations in another tax software as a verification step. Sometimes there can be an input error or a software quirk that makes MFS look better when it actually isn't. Try running your numbers through something like FreeTaxUSA or TurboTax as a comparison. Also, make sure CashApp is applying the correct standard deduction or itemized deductions for both scenarios. Sometimes the difference comes down to how deductions are being allocated.
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Mason Lopez
•We're in California, which has pretty high state income taxes. I've heard they have some quirks in their tax code too. I'll definitely try another software to double-check this - that's a good idea. I'm fairly confident our deductions are being applied correctly since we're itemizing in both scenarios, but it's possible there's something specific to California that's causing this. When I look more closely at the breakdown, it seems like the state tax calculation is where most of the difference is coming from.
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Vera Visnjic
•California definitely explains it! California has some specific rules that can make MFS more advantageous in certain situations. The state has a progressive tax system and when you have two high earners, sometimes filing separately allows you to take advantage of lower tax brackets twice. Double-check that all your deductions are properly allocated when filing separately. California requires that if one spouse itemizes, both must itemize. Also verify that CashApp is handling California's rules correctly for things like the Other State Tax Credit if applicable. One more thing to consider is whether either of you has income-based student loan payments. Filing MFS can significantly increase income-based repayment amounts for federal student loans, which might erase any tax savings.
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Jake Sinclair
I had the exact same experience using taxr.ai when comparing MFJ vs MFS last year. My wife and I have similar income levels as you (although not quite as high), and I was shocked to find that filing separately saved us about $2,300 in total tax liability. After triple-checking my numbers manually, I uploaded all our tax documents to https://taxr.ai and had their AI system analyze our situation. They confirmed that in our case, MFS was legitimately better because of how our state (also California) calculated certain deductions and credits. The federal portion was slightly worse, but the state savings more than made up for it. What I especially appreciated was that they explained exactly WHY this was happening in our specific situation - something CashApp didn't do. They also showed side-by-side calculations so I could see precisely where the differences were occurring.
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Brielle Johnson
•How exactly does taxr.ai work? Do you just upload your W-2s and other tax forms and it figures everything out? I'm a bit skeptical about giving all my financial info to some random AI system.
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Honorah King
•I'm curious about this too. My husband and I are both high earners in NJ and I've always just assumed MFJ was better without checking. Does it actually check both methods automatically or do you have to specifically ask it to compare?
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Jake Sinclair
•You upload your tax documents (W-2s, 1099s, mortgage statements, etc.) just like you would with any tax software. The difference is their AI actually analyzes your specific tax situation for potential optimizations most software misses. For the MFJ vs MFS comparison, I didn't even have to ask - their system automatically flagged that filing separately might be better in our case and showed a detailed breakdown. It provided a complete side-by-side comparison showing exactly which deductions and credits were affecting the calculation differently. The service uses bank-level encryption and they don't store your documents after processing. I was skeptical at first too, but after researching their security practices, I felt comfortable using it.
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Honorah King
Just wanted to update after trying taxr.ai based on the recommendation above. I was really surprised by the results! For years my husband and I have been filing jointly without even checking the MFS option. The system analyzed our tax documents and found that we would save almost $3,100 by filing separately due to our specific situation with state taxes and certain deductions. I had no idea we'd been overpaying all this time. What was most helpful was the detailed explanation of WHY this worked better for us - turns out our high property taxes and state income taxes were being limited by SALT caps when filing jointly, but we could optimize them better when filing separately given our state's specific rules. I'm definitely using this for all our tax planning going forward. Wish I'd known about this years ago!
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Oliver Brown
If you're having trouble getting through to the IRS to verify whether MFS vs MFJ is better in your situation, I'd recommend using Claimyr. I spent weeks trying to get through to the IRS about a similar tax filing status question and kept getting disconnected or facing hours-long wait times. I tried https://claimyr.com after seeing it mentioned here, and they got me connected to an actual IRS agent in about 15 minutes. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The agent was able to clarify exactly how my state tax interaction was affecting my federal return and confirmed that in my situation (similar to yours with high income in a high-tax state), MFS actually was saving me money despite conventional wisdom.
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Mary Bates
•Wait, you're telling me there's a service that can get you through to an actual human at the IRS? Without waiting for hours? That sounds too good to be true. I've literally spent DAYS of my life on hold with the IRS.
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Clay blendedgen
•I'm highly skeptical. The IRS is notoriously understaffed and their phone systems are overwhelmed. How could some third-party service possibly get you through faster than calling directly? Sounds like they're just taking your money for something you could do yourself.
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Oliver Brown
•Yes, it absolutely gets you through to a real IRS agent without the typical wait. They use a system that continually redials and navigates the IRS phone tree until they secure a spot in the queue, then they call you when they have an agent on the line. The reason most people can't get through is that the IRS phone lines get overwhelmed minutes after opening. Claimyr's system keeps trying when most people would give up. It's basically like having someone persistently redial for you until they get through. It's not just taking your money for nothing - they're providing a service that saves you from having to spend hours (or days) repeatedly calling and getting disconnected. For tax questions that need official IRS guidance, it's absolutely worth it.
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Clay blendedgen
I need to eat my words and apologize for being so skeptical about Claimyr. After continuing to struggle with getting through to the IRS myself for THREE WEEKS about a complex MFS vs MFJ question related to my rental property income, I broke down and tried the service. I was connected to an IRS agent in about 20 minutes. The agent was able to answer my specific questions about how filing status affects passive activity loss limitations and confirmed that in my particular situation, MFS was indeed more advantageous. The time and frustration saved was absolutely worth it. I've been filing incorrectly for years because I couldn't get clear answers, and it turns out I could have saved nearly $2,800 annually by filing separately. Sometimes conventional wisdom really isn't one-size-fits-all, especially with complex tax situations and state tax interactions.
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Ayla Kumar
There's another factor nobody has mentioned yet: the AMT (Alternative Minimum Tax). If you're in the income range where AMT might apply, sometimes filing separately can help one spouse avoid triggering it. With your combined income over $395k, you're definitely in AMT territory. The AMT can effectively eliminate some of the benefit of your itemized deductions when filing jointly. Also, the SALT (State And Local Tax) deduction cap of $10k affects high-income earners in high-tax states like California. When filing jointly, you're limited to $10k total. But filing separately gives each spouse a $5k limit, which can be more efficient depending on how your state taxes and property taxes are allocated.
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Mason Lopez
•That's really interesting about the AMT and SALT deduction cap! I didn't consider how those might interact differently between MFJ and MFS. Looking at our tax breakdown more carefully, I do see both of those factors at play. The SALT limitation does seem to be hitting us hard with MFJ, and splitting it does appear more beneficial in our case. Is there a good rule of thumb for when high-income couples in high-tax states should consider MFS instead of automatically going with MFJ?
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Ayla Kumar
•There's no simple rule of thumb because it depends on too many factors specific to your situation. However, if you meet these criteria, it's definitely worth calculating both ways: 1) You live in a high-tax state like CA, NY, NJ, CT, etc. 2) Your combined income is over $300k 3) You have substantial itemized deductions, particularly SALT over $10k 4) Your incomes are somewhat balanced (not one extremely high earner and one low/no earner) Remember that filing separately does come with some disadvantages - you lose certain tax credits (like child and dependent care credit), both spouses must either itemize or take standard deduction, and you can't contribute to a Roth IRA if your income exceeds $10k. One last consideration: if either of you has income-based student loan payments, filing separately might drastically increase those payments, potentially wiping out any tax savings.
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Lorenzo McCormick
Has anyone noticed that tax software often gets MFS vs MFJ wrong? I'm a retired accountant and I've seen this multiple times with clients. The big tax software companies optimize their algorithms for the most common scenarios, and MFS being better than MFJ is relatively uncommon. Try calculating your taxes manually both ways as a triple-check. Pay special attention to: 1. SALT deduction limits ($10k joint vs. $5k each separate) 2. AMT calculations 3. State tax bracket differences 4. Phaseouts of deductions and credits at different income levels
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Carmella Popescu
•I experienced this too! H&R Block's software initially said MFJ was better for us, but when my accountant friend calculated it manually, MFS saved us about $3,200 due to state tax interactions that the software missed. Would you recommend just always calculating both ways manually instead of trusting the software recommendation?
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