The answer: most likely you should file jointly. But there are a few situations where continuing to file separately saves you more money. Should you file taxes jointly or separately? Read on to see what suits your circumstances.
You Should Probably File Jointly
In the vast majority of situations, filing jointly saves you the most money. If you’ve just gotten married, then you’ve likely just paid for a wedding, and saving money is probably a big priority of yours. If you work and your spouse does not (or vice versa), if you have children, or if one of you earns far more than the other, you’re likely going to save a lot from filing jointly.
Married Filing Jointly (MFJ) offers numerous benefits. Your combined earnings could put you into a lower tax bracket than where you would fall separately. You’re also allowed access to a long list of tax deductions & credits. Not to mention rather than handling two returns, you’ll handle one. As long as you were married by December 31st, you can file jointly. Overall, MFJ offers lower tax responsibility and thereby almost always is the better option.
Here’s When Married Couples Should File Separately
Married Filing Separately (MFS) has its perks for a few kinds of couples. The first situation is if one of you has a large amount of student loan debt. If you have student loan debt that hasn’t been paid in over 270 days, there’s a good chance your tax refund could be rerouted through the Treasury Offset Program in order to chip away at the unpaid loans. So in this case by filing separately, one of you will still receive a refund.
Another situation for MFS is if either of you has an excessive amount of medical bills. At the time of writing, the IRS allows you to deduct qualified medical expenses that exceed 7.5% of your adjusted gross income. So if you decide to file jointly, your expenses would have to be much higher in order for you to deduct them.
If you’re getting a divorce, you might want to file separately as well. Filing jointly turns your tax responsibility into one lump sum for you to tackle together. If your spouse doesn’t hold up their end of the bargain, you’re still held responsible. For those separating or in the process of getting a divorce, keeping your tax responsibilities completely separate is best for your protection.
Finding the Filing Status That Saves You the Most Money
Even if you don’t have excessive medical bills, you’re paying on your student loans, and you’re not getting a divorce, sometimes there are outliers. There are couples that run the numbers and find filing separately saves them money. How can you know what’s actually best for your financial situation? Ask a professional. Working with a CPA gives you clear outcomes, not a roll of the dice. Your tax professional will help you find the filing status that benefits you the most and get your refund back the fastest. Contact Chris Haro and his team for easy, reliable tax preparation services.