Should We File Jointly or Separately? 7

Tax Filing Options For Married Couples

Married couples have two ways to file their federal income taxes: jointly and separately. But which is better? How do you know which filing method to choose?

The truth is, there are pros and cons to both filing methods and choosing the right one for you will depend solely upon your individual circumstances.

For example, while recent changes in tax laws have eased the pains of the marriage tax penalty, its repercussions still exist, particularly for couples who make close to the same income and fall into the 25% tax bracket. These couples will pay more in taxes as joint filers than they would if they filed separately.

That said, this scenario ends as the couples’ incomes grow. A married person filing separately will see part of his/her income breach higher tax brackets before a single person making the same amount. A single filer can make up to $160,850 for example, and remain in the 28% bracket with the first $77,100 of that income being taxed at the lower 25% rate. A married person filing separately will pay 28% in taxes on the first $97,925 and 33% for any income over that up to $174,850. Had this same married person filed jointly, they would have paid only 25% in taxes for the first $128,500 in income and then only 28% for anything over up to $195,850.

Obviously, couples making large amounts of money – particularly when one party makes substantially more than the other – may well benefit from filing jointly.

Another issue to consider is the accuracy of the return itself. When filing jointly, frequently one spouse or the other prepares the return for the couple. If that spouse uses questionable tactics and is caught, both spouses are on the hook since both spouses signed the return.

To protect yourself then, you need to establish what the IRS refers to as “innocent spouse protection”. To do this, you would need to be able to prove that you were unaware of the tactics in question and filing a separate tax return is a good way to accomplish this.

Certain credits and deductions are also waived when filing separately, such as the cost of dependant care, adoption expenses and the earned income credit. The child tax credit can also be reduced depending upon your income level. Claiming capital losses are drastically reduced (often by half) and the educational tax credits aren’t allowed for separate filers.

In addition, filers in community property states will have some difficulty filing separately as the state’s law governs how income is split.

So, how can you know which method is best for you?

Try both and compare! Most tax preparation software packages have the ability to calculate your taxes both ways and can show you the potential savings or losses from one filing method over another so it never hurts to see both sides before you file.

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Discussion

  • rene curameng

    I am separated from my wife and will be divorced from her on May 21st this year. My question is if I am filing separately(because my wife has already done so) can I still file, itemizing deductions, or would I have to file using standard deductions?

  • QUANITA HARDEN

    i have an order o protection against my husband. can i file separately on my taxes since we are seprated but not legally? what are the consequences?

  • Mai

    My husband and I have four kids and we would like to try to file separately this year. We don’t make a lot about 35 gs together, I would have to say. Will it make a big difference in taxes if filed separately, because we could each claim two kids?

  • Glenn Aichlmayr

    My wife and I have been separated for all of 2010. we live in Texas and legal separtion is not honored in Texas/ She doesn’t work and I provide more than half of her support. Can I claim her as a dependent?

  • Christina

    My husband owes back child support, he pays on this every month but filing our taxes every year is a nightmare because of it and it takes forever to know what is going on with our taxes. I have five children of my own, when my husband filed before we got married he owed money but now that we are filing together the refund that we are supposed to get is going towards his debt. I do file an injured spouse but it seems to me like they are taking money that should be mine because of my children, is there a good possability that if we filed separately it would be better for us?

  • Patty

    If you are filing married separately, and you have children under age 18, should one parent file as head of household……

  • JulesARS

    We currently live in KY. My husband was just offered a permanent job in TX. This job requires him to live and work in TX. He begins in 1 week and will be going a head and moving there. I will be staying in KY to get our home ready to rent or sell. In the meantime, I will also be working a part time job which I just began a week ago. My question is, how do we file the state return under these circumstances? My husband will already be relo’d, but I will not. TX does not require a state return, KY does. Do we file based off my husband and file as a resident who moved during the year? Do we have to file separately? Is there anything we need to do to show my husband has relocated?