Before totaling those columns and checking those boxes, consider whether or not you benefit from filing joint tax returns. In some cases, filing separately makes financial, organizational or legal sense. If money is your main concern, fill out two returns, one for filing separately and the other for filing jointly, and compare your totals. If you have any questions about the most current tax regulations, consult with an accountant.
If you and your spouse both earn income, you may benefit from filing a joint tax return. The tax rate schedule has some married people who file separately paying into higher tax brackets sooner than couples who file joint returns. This phenomenon typically occurs for people who earn higher income, such as those who fall into the 28, 33 and 35 percent tax brackets.
Filing jointly has deeper implications if you or your spouse have different codes of ethics. If one of you likes to overlook cash income or heap on iffy deductions, you both could wind up in trouble. In addition, any errors or problems you have on your joint return could result in both of you being liable and having to pay penalties and interest.
Deductions and Credits
Filing separately or jointly can trigger or negate various tax credits and deductions. For example, married couples filing jointly have access to credits for child and dependent care, adoption expenses and various credits for education expenses. On the other hand, you can only deduct some types of education loan interest if you are filing jointly. If you file separate returns, your IRA contributions may not qualify for a deduction if your spouse contributes to an employer's retirement plan. Taxes on Social Security benefits can be impacted negatively by filing separately.
Substantial Expenses or Deductions
Some rare cases financially justify filing separately. If someone has major medical expenses, sometimes he can only deduct them when they constitute a significant percentage of his income. If he and his spouse file jointly, it may be harder to meet the income requirement. Likewise, a large amount of itemized deductions can trigger more tax savings when they have a greater cost than a certain percentage of one person's income.
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