2008 tax return driving me mad!

[RodD 0]

However I'm finding before adding my wife's income my tax refund is $200 or so higher for about $3,500 in foreign income. It shows up under Less Common Income as both + and - number of the same amount yet it's still slightly increasing the net amount of taxes paid. Is this correct result or am I missing something? As the original poster said I was expecting it to completely cancel out.

Thanks

Maybe not missing something. A month ago I could have told you better but I filed and already got my refund. If your had simple earnings and W2 income, then it would pretty much add it in and take it off.

Without getting too technical. Do you have Schedule D earnings? Qualified dividends, capital gains, etc? If so the total income incuding hers plays into that as I recall. If your taxes are not calculated on the basic tax tables, but rather on the Qualified Dividends and Capital Gains Tax Worksheet, then there could be a slight increase due to the worldwide income.

So it's possible that your refund is $200 higher by deleting your wifes income (on a joint return), but if you also delete the filing joint status and go back to married filing separately, you will find your refund is even less. So you have to judge which is best for you but compared them as you would be required to file.--

Married filing separately with only your income, OR

Married filing joint with another $3500 her income

The filing joint still worked out better for me. If you have more questions about the capital gains and dividend things, I can explain further if you PM me, but I didn't elaborate here because I didn't want to give too much information if you didn't need it.

Actually there is a "Foreign Earned Income Tax Worksheet", found in the instructions for Form 1040, that Turbotax uses to calculate your final tax. It first figures your tax with the foreign income included. Then it figures the tax for the foreign income alone (which will be in a lower tax bracket). Then it subtracts that second amount from the first, which means you do end up paying some tax on the foreign income.

Unfortunately that's the only way you can file jointly, but you still end up saving a huge amount over filing separately.