Married?  Is It To File Separately Or Jointly?

For most married couples, the tax season brings to light a choice that must be made.  Is it best to file separately, or should you file jointly?  In the last few years, some tax laws have changed to make filing taxes jointly more beneficial to married couples by raising the income stated in the different tax brackets.  To make the best decision, each couple needs to asses their own situation, both jointly and separately, to then determine which way to file.    

At the point where either spouse’s income is above the $60,000 mark, it is questionable whether or not filing separately is still beneficial.  The reason is that a person filing married but separate still reaches the tax bracket of 28%, or 33% or 35% quicker than if they had filed jointly or as single.  

For example, a person filing as single with an income of $65,000 would be in the 25% bracket.  However, a person with an identical income filing as married but separate would be in the 28% bracket.  Yet, if that same married person filed jointly with a combined income lower than $106,000, they would find themselves back in the 25% bracket. 

Anytime a spouse files married but separate, the return for each spouse must be filed using the same method for deductions.  Put another way, IRS forbids one spouse to itemize deductions while the other spouse uses only a standard deduction.  If the IRS did allow this practice, then one spouse might experience an increased tax liability and the other spouse a decreased tax liability.      

There are other drawbacks to filing married but separate.  In fact, some deductions may not be used if you file married but separate.  A few of deductions of this nature are adoption expenses, earned-income credit (EIC), educational credits, and paid interest on student loans.  If any combination of these deductions reduce the tax liability of the couple, then it would be smarter to file a tax return jointly.  Otherwise, there might be a missed opportunity to greatly lower the tax liability of the couple.     

The best method to determine if filing separately or jointly is more beneficial is to actually prepare the tax return each way.  As with any matter concerning taxes, if anything is unclear then it is always best to consult a qualified tax professional.  Receiving advice about your taxes from a tax professional is one of the best ways to ensure that your return is prepared properly.