Marriage comes with many choices you and your spouse will have to make together. Most of these are fun and exciting decisions. One less exciting but very important decision you’ll have to make is how to prepare your taxes.
For all married couples, there is an annual choice to make when selecting your filing status: are you married filing jointly or married filing separately?
“Married filing jointly” is a filing status for married couples who choose to file a single tax return together, while “Married filing separately” is a filing status for married couples who choose to file their file their tax returns separately.
Ultimately, filing a joint return is typically more beneficial. When you choose not to file jointly, you limit or altogether forgo several tax breaks and deductions including:
The child and dependent care tax credit
The adoption credit
The Earned Income Credit
The American Opportunity Credit and
Lifetime Learning Credit for higher education expenses
However, there are a few situations where Married filing separately is more preferable or beneficial.
For example, if one spouse has significant medical expenses with a low income (AGI) and the other spouse has a high income with no medical expenses.
Keep reading below for more...
Another factor to consider is that it may be preferable to file separately when you need to separate your tax liability from your spouse’s. Signing a joint tax return makes you both responsible for the accuracy and completeness of the return and obligates you for any current or future tax liability. If you file separately, you will only be responsible for the accuracy and payment of taxes for your own return.
If you know or suspect that your spouse is omitting income or overstating deductions and/or credits, you may want to file separately.
Everyone’s tax situation is different and can be complex. Filing status for Married couples is another tax area which needs to be addressed to ensure the correct filing status is chosen.
If you have a tax question, feel free to Ask Izzy from Be Secure Financially for free!