I observe behavior whenever we file our taxes that I do not understand. It's not that I think TurboTax is making a mistake, I am just wondering why it behaves this way.

Let's say these are our (made up) details:

Spouse A income: 100k
Spouse A withholding: 10k

Spouse B income: 30k (50k with 20k into a 403b)
Spouse B witholding: 4k

When I enter all this data, I see the following behavior

After entering Spouse A first I see a 4k refund After entering Spouse B the 4k refund goes away and I see we owe 1k

This doesn't make sense to me because Spouse B is withholding a higher percentage of their income so, I would think, when we combine all the income together, Spouse B would increase the refund, not decrease it.

But, like I said, my assumption here is that I just don't understand something.

  • Turbotax also offers to compare directly with 'married filing seperately' (which you can chose at will any year without future consequences). That allows you to see the tax you'd pay when filing seperately, and why it's different.
    – Aganju
    Mar 21, 2021 at 17:03

2 Answers 2


The US has progressive tax brackets, meaning that the tax rates increase as you go up in tax brackets. For example, for 2020 for married filing jointly, the first $19,750 of taxable income is taxed at 10%; the next $60,500 of taxable income is taxed at 12%; and the next $90,800 of taxable income is taxed at 22%, etc. (And there's also effectively a "0% bracket" at the beginning become some amount of income is excluded from taxable income by the standard deduction, etc.)

So if you start adding income bit by bit, it will always at first seem like your effective tax rate is low, and effective tax rate will seem to go up as your income increases. That doesn't mean that later pieces of income are treated differently from earlier pieces of income.

  • Understood, however, in this example, and IRL, the A and A+B fall in the same bracket, so we cannot explain the behavior with tax brackets.
    – Murenrb
    Mar 21, 2021 at 18:42
  • @Murenrb: But A falls across several brackets. It's not just the bracket at the top of A that matters. Parts of A will be taxed at 10% and 15% (and some not taxed at all, effectively 0%), even if the top of A is at 22%.
    – user102008
    Mar 21, 2021 at 18:45
  • Oh! This is the missing piece. I have been doing taxes for years never understanding that each increment of income is taxed at that increments rate not all income is taxed at the top. Wow. Well, I feel like an idiot, but now I totally get what is happening! Thanks @user102008
    – Murenrb
    Mar 21, 2021 at 19:23
  • @Murenrb: sorry I meant 12% instead of 15%
    – user102008
    Mar 21, 2021 at 21:48

I'm assuming you file jointly. The income of the second spouse is taxed at the "incremental" tax rate. In your case this income is taxed (more or less) in the 22% bracket, so the incremental tax on your spouses income would be $6600 dollars, which is more than the withholding.

You can do it the other way around and see the same effect: if you start with B you will see a large refund but once you add A, you'll end up in the same place.

Th exact numbers obviously depends a lot on your specific details and what else you have going on tax-wise.

  • Understood, however, if you see Spouse A is only withholding 10% and Spouse B is withholding 13%, so why would there be a refund at all when I enter Spouse A and then, why would it go down when I enter B?
    – Murenrb
    Mar 21, 2021 at 18:41

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