Practical Guidance on Filing Income Taxes Jointly or Separately

If you’ve recently wed, congratulations! One of the benefits of marrying the love of your life is being able to file one tax return for both of you. Are you still wondering why it’s beneficial to now file income taxes together, though? In this blog, we’ll break it down in an easy-to-understand way, plus we’ll give some essential information on claiming a child as a dependent. 

Reasons for Filing Jointly vs. Separately 

Simply put, filing your income taxes jointly as a married couple opens the door to various deductions and credits that aren’t available if you file as married filing single. Such benefits include:

  • Child and Dependent Care Tax Credit
  • Earned Income Tax Credit
  • Credits or deductions for expenses incurred during the adoption process
  • Student loan interest deductions
  • American Opportunity and Lifetime Learning Education Tax Credits

Another way that filing jointly benefits income tax filers is by allowing high earners to combine their income with their spouse who might earn significantly less. The advantage for the high earner is that he or she is designated under a lower tax bracket, which reduces the overall tax liability. 

Reasons for Filing Separately While Married

To be blunt, filing jointly with your spouse is better in the vast majority of cases. There are some circumstances, though, where spouses should consider filing separately. A common situation occurs when one spouse has a significant amount of out-of-pocket medical expenses. In this case, the couple should crunch the numbers to see if the expenses exceed a certain percentage (7.5) of his or her adjusted gross income when filing jointly. If it does not, there’s a much better chance the expenses can indeed be deducted in a separate filing. 

Couples who were in the process of divorcing during the last part of the year for which they are filing taxes have a choice to make. Should they file jointly one last time and (potentially) take advantage of greater tax savings, or file separately to avoid one more contentious issue? Keep in mind that if you file jointly you and your spouse will be jointly and severally liable for the taxes owed and if you are audited you will be jointly liable for any taxes assessed by the IRS for that year. Perhaps you filed for divorce because you discovered your spouse has mountains of debt; in this case, filing separately makes sense. 

Claiming Children as Dependents

When you are filing jointly, claiming your children as dependents is fairly straightforward. However, it can get much more complicated when you and your spouse are divorced or separated. 

Generally, only the custodial parent is able to claim a child as a dependent. To do this, the child must share the same residence (principal place of abode) for more than half the nights in a tax year. However, if the non-custodial parent meets a complex set of three prerequisites and one of three statutory exceptions, then he or she may claim the child as a dependent. 

Conclusion

As you can see, the nuances between filing jointly and separately for married couples are fairly complex. Knowing how to file when a divorce decree is pending or you and your spouse plan to divorce also presents potential issues when filing your income taxes. 

Our firm helps taxpayers resolve any issues with the IRS or other government agency. Please reach out to us soon to receive a free 15-minute consultation on your tax matters.

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