No matter your situation, status, income level or debt...seek out professional to help you sort out what's best.
One of the many things that change once you’re married is that you might want to consider whether you should file your taxes jointly. You need to understand the pros and cons of filing separately and jointly before making this decision, and there are several factors that go into why you would choose either one. Here are some things to consider when contemplating how to file your taxes.
FILING JOINT vs. SEPARATE TAX RETURNS: WHAT IT MEANS
“Filing jointly means that you and your spouse have one tax return compared to filing separately, meaning that you each have your own,” says Brendon Cullen, CPA, Ballenthin, Funk & Johnson, LLP. When you file jointly, your incomes are added together to determine your tax bracket, which determines how much, or the percentage, of what you’ll pay in taxes.
REASONS TO FILE TAXES JOINTLY
In general, it behooves couples to file jointly because in most cases they will likely qualify for better tax breaks. This is especially true if one spouse earns a much higher income than the other spouse. Also, there are many tax credits and deductions only available to married couples who file together. Some examples being credit for adoption expenses and child and dependent care credit. In general, Cullen says filing jointly also saves on fees related to each return. (The fewer the returns, the fewer fees you usually would have to pay to your accountant).
SOME REASONS TO FILE SEPARATELY
There are reasons why a couple would consider filing separately. “A couple would benefit from filing separately when they need to show their stand-alone income,” says Cullen. Examples of when you would want to show stand-alone income are if either member of the couple owes child support, or if one member of the couple has large medical bills. Why large medical bills? Because you can deduct medical bill-related expenses once they are more than 10% of your adjusted gross income. So in filing separately, you might ensure that the bills hit over 10% of the income (taking advantage of this deduction). If you file jointly and have a larger joint income, it might be harder to get that deduction.
No matter what your situation, status, income level, or debt, Cullen advises seeking out a professional to help you sort out what’s best in order for you to get the most out of tax breaks. “Please contact a tax professional, either a CPA or an EA regarding your specific circumstances,” says Cullen. “There can be differences depending on the state that you live in, future plans, etc. that could change the answer whether to file jointly or separately.” You might have that person crunch the numbers both ways, filing jointly and separately, to help determine which way to file is best for you.