The IRS and the federal government gives married couples the option of filing their taxes jointly or separately. Overall, one of the biggest incentives in getting legally married within the state in which you live is that it can give couples the opportunity to save big money on their taxes by combining their returns. For married couples trying to start a life and a family together, they are given many tax breaks by the IRS that are financially beneficial so that they can have an easier time buying a house and providing for their kids. However, there are also some benefits to filling separately. But what is better, filing jointly or separately?
First off, if a couple is within a low income tax bracket, it is far more expensive to file a tax return on income separately. This is because the IRS usually takes a bigger percentage if someone is claimed as an individual. If the tax return is filed jointly, the couple will benefit from a higher tax break because both incomes are combined. In the long run this can save a lot of money and can be one of the biggest reasons for couples to get their marriage license and live under the same roof.
Another reason to file separately is if one person has high medical expenses. This is because medical costs can be deducted if they reach over 7.5 percent of the person’s claimed income. This can be especially important and can save a lot of money if the person has a low income and a lot of medical expenses, because by filing jointly you could risk diluting the percentage of deductible costs, which can make it harder to pay for medical costs. This should be taken into consideration, especially if the person doesn’t have medical insurance.
The IRS will also give married couples the option of itemized deductions or standard deductions. Whichever option works out best for the couple’s financial standing should be the avenue to take. You can contact CPAs in Murrieta or whatever you might live to understand the difference between both and find out which one makes more sense for you. It might benefit a married couple to file separately if one spouse has very low income and a lot of deductions, especially from medical expenses.
There are also a number of other reasons, that aren’t completely fiscal, that might play into the decision as to whether it is beneficial to file separately or jointly. For instance, if your marriage is on the rocks or if you suspect your partner of infidelity, it might be smart to file separately. If your spouse is the one spending the money and making an income, both parties are responsible for paying the taxes owed. If you cannot trust your spouse and fear that you might be left with penalties, high interest or even a tax lien, it might be important to talk to your accountant about separating your claims. It will save both heartache and stress when the accusations go flying.