The multiferroic and the rotating magnetocaloric properties of Nd0.8Tb0.2Mn2O5 are investigated by microscopic optical probes and macroscopic magnetic measurements. Raman-active phonons as a function of temperature, and Nd3+ and Tb3+ infrared active crystal-field (CF) excitations as a function of temperature and under magnetic fields up to 11 T have been studied in Nd0.8Tb0.2Mn2O5. The obtained results are compared to those of NdMn2O5 and TbMn2O5 reference compounds. The observation of one set of Raman-active phonons and CF excitations rule out possible twinning while their energy positions and thermal evolutions indicate noticeable changes of Mn1-O3-Mn1 and TbO8 structural units. This would explain the nature of separated magnetic phases in Nd0.8Tb0.2Mn2O5. The degeneracy of the ground-state Kramers doublet is lifted (Δ0∼9cm–1), indicating that the Nd3+–Mn3+ interaction impacts the magnetic and ferroelectric properties of Nd0.8Tb0.2Mn2O5. The Zeeman splitting of excited crystal-field levels of the Nd3+ ions at low temperatures shows that thegz factor is weak compared to that in NdMn2O5. This indicates that the R3+ spins in Nd0.8Tb0.2Mn2O5 are mostly aligned within the ab-plane. The nature of magnetocrystalline anisotropy in Nd0.8Tb0.2Mn2O5 as well as in all RMn2O5 compounds is quantitatively investigated by studying the anisotropy of paramagnetic Curie temperatures along (θ||) and perpendicular (θ⊥) to the c axis, (θ||−θ⊥), as a function of the rare-earth atomic number. It is particularly found that the magnetocrystalline anisotropy is mainly determined by the quadrupolar charge distribution of 4f shells. The rotating magnetocaloric effect in Nd0.8Tb0.2Mn2O5 is also evaluated and compared to that in NdMn2O5 and TbMn2O5. Our findings show that Nd- and Tb- separated magnetic phases independently contribute to the magnetocaloric effect of Nd0.8Tb0.2Mn2O5.