The Best Way to File Taxes When Married

Married people can choose a filing status that saves them money.

Married people can choose a filing status that saves them money.

One of the challenges many new couples face is finding common ground in their attitudes about money. Determining how to file taxes can present new challenges, especially if one of the people has a vastly different income or financial habits than the other. However, certain key guidelines can help you decide if you should do your taxes as a married couple filing jointly or a married couple filing separately.

Tax Brackets

Changes to tax brackets and tax law have shifted the one-time marriage penalty into a marriage bonus. In certain tax brackets, married people filing jointly pay less taxes than married people filing separately. People who choose married filing separately enter the 28 percent, 33 percent and 35 percent tax brackets at lower income levels than those who select married filing jointly. To make sure you save money, try filling out tax forms under both filing statuses and see which one triggers a lower tax payment.

Medical Expenses

One of the instances in which it benefits a couple to file separate tax returns arises when one of the people has racked up serious medical expenses. An individual typically cannot deduct medical expenses unless the expenses total more than 7.5 percent of the taxpayer's annual adjusted gross income. Hitting that minimum percentage proves much harder when using the total of two incomes.

Deductions and Credits Forfeited

The Internal Revenue Service phases out several tax credits and deductions when people choose married filing separately as their status. Among the tax benefits your forfeit are the Child and Dependent Care Credit, the College Tuition Deduction, the American Opportunity Tax Credit, any deduction of student loan interest paid and the Earned Income Tax Credit. In addition, the total amount of capital gains losses you can claim as a deduction is divided in half.

Ethical Issues

One of the most compelling reasons to select a filing status of married filing separately concerns ethics. If your spouse under-reports income, over-reports deductions, consistently pays taxes late or has other financial problems, you should file a separate return. When a married couple files jointly, they both sign the tax return, which makes them legally liable for all the information on the tax form. In some cases, the Internal Revenue Service has provisions for innocent spouse protection, but the spouse must prove innocence.

About the Author

Nina Makofsky has been a professional writer for more than 20 years. She specializes in art, pop culture, education, travel and theater. She currently serves as a Mexican correspondent for "Aishti Magazine," covering everything from folk art to urban trends. She holds a Bachelor of Arts in English from Mills College.

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