12 Feb Should You & Your Spouse File Your Taxes Jointly or Separately?
With tax season kicking off and Valentine’s Day upon us, we thought it would be fitting to review the filing options married couples have when it comes to filing their taxes.
Married couples have the option to file their federal income taxes two ways, jointly or separately. Most couples file jointly, as it is the easier option and the IRS encourages it by offering multiple tax breaks for couples that do. However, it may be beneficial for some couples to file separately, depending on the couple’s personal situation and where they live.
Benefits of Filing “Married Filing Jointly”
The IRS allows more tax credits and deductions for married couples that file together, such as:
• Earned Income Tax Credit – designed for those with low to moderate income
• American Opportunity and Lifetime Learning Education Tax Credits – reduces taxes for those in college, or have a spouse/child in college
• Reimbursement for adoption expenses
• Child & Dependent Care Tax Credit – for working parents that pay a caregiver
• Student loan interest deduction
• Tuition and fees deduction
Reasons to File “Married Filing Separately”
The are some instances in which it makes sense for married couples to file separately. Here is a quick list of situations in which a couple may want to file separately.
• Repaying student loans – especially if a spouse’s student loan is contingent on income
• The couple is separated or in the process of a divorce
• Spouses have an income disparity with one making more while the other makes a lot less
• One spouse has high medical bills
• Both spouses are high income earners
• Liability concerns – protects an innocent spouse from potential legal or tax issues caused by the other spouse
Additional Items to Factor in When Deciding
There are quite a few additional variables that may come into play when determining which way to file. Here are just a few additional items to consider:
• Claiming dependents – two taxpayers cannot claim the same dependent unless filing jointly
• Head of Household – both may claim head of household if living apart with some additional qualifications
• The married couple lives in a Community Property State in which income and deductions are shared
Deciding Which Status to Use
If a couple is unsure which way to file, we suggest running a side-by-side comparison to determine which filing status is most beneficial.
♥ So as you spend Valentine’s Day with your spouse, make a toast to your marriage and all of the tax benefits that come along with it. Cheers! ♥
We Can Assist You
Kmetz, Elwell, Graham & Associates, CPAs is available to assist you in determining which option may be best for you and your spouse. Contact our team by calling 772-231-6902 or complete the online contact form.