Getting hitched usually means filing a joint tax return. However, this doesn't mean you always have to choose married filing jointly on your tax return. Even after you've tied the knot and no matter how long you have been married, you still have the option of filing as an individual.
File a Joint Tax Return
For the majority of married couples, it is most beneficial to file a joint tax return. In most cases, you will be liable for more taxes if you file a separate return, but there are some exceptions to this rule. Depending on your unique situation, you could save hundreds of dollars in taxes by filing a joint return.
Tax Brackets
Filing jointly means you may be placed in a lower tax bracket. If you combine incomes on a joint tax return, you may enjoy taxation in a lower tax bracket than if you filed individually. This is because the Internal Revenue Service (IRS) maintains different thresholds for people who file jointly versus as individuals.
Tax Credits and Deductions
While you may be eligible for some credits and deductions as an individual filer, you might be eligible for more if you filed jointly. Do you have student loans to repay? You cannot take student loan interest deductions and education credits if you file separately. You will also be ineligible for tax breaks like the earned-income and dependent-care credits. If you adopt a child in a tax year for which you choose the married filing separately status, you cannot take the adoption credit. In addition, you may lose the chance to deduct rental real estate losses and have your allowed individual retirement account (IRA) deductions reduced if you file separately.
Special Tax Circumstances
In some cases, it does make good financial sense to file separately. For example, if you or your spouse has a lot of medical expenses to claim, you may want to go the married-filed-separately route. This is due to the fact that you can only deduct medical expenses if they exceed 7.5% of your adjusted gross income. This threshold may be easier to meet if you do not combine incomes on your tax form. The same goes for miscellaneous itemized deductions, which must exceed 2% of your adjusted gross income. Some examples of miscellaneous itemized deductions include certain types of legal fees and un-reimbursed business expenses. Certain trust fees and union dues may count as well.
Questionable Tax Deductions
While trust is important in a marriage, there may be times when you question your spouse's judgment or feel unsure of the validity of his deductions. In such a case, it is usually best to file separately. In an audit, you will be held jointly responsible for any tax return mistakes, even if you claim you were unaware of them.
Choosing a Tax Status
While most married people may be best served by a married filing jointly tax status, each couple is unique. Talk it over with your spouse and evaluate both options before you make a decision.
Sources:
Entrepreneur.com, *" Tax filing status--are joint tax returns always best? " (accessed January 31, 2011)
IRS.gov, *"Publication 501 - Main Content" (accessed January 31, 2011)
IRS.gov, "Publication 529 - Main Content" (accessed January 31, 2011)
Nicole Madison - Nicole Madison is a freelance writer and editor who focuses on health, education, business, and parenting topics. For more than a decade, ...
Join the Conversation