File Taxes Married Jointly or Separately – Which is Better?Last Revised on February 7, 2012
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A lot of new couples might not know, but as a married couple you have a choice to file tax jointly or separately. Even though you are not considered single anymore, you can both file your taxes individually which is also known as married filing separately. We will explore pros and cons of filing jointly vs separately, and how to file as “single” even when you are married. Which filing status is better for you will depend upon your individual circumstances, as you will see after reading the reasons why.
Married Filing Taxes Separately versus Jointly
How do you file a tax return married filing separately? To prepare a tax return for a person who is married but wants to file separately from spouse, you have to choose the option “married filing separately” or MFS on box 3 of page one of tax form that you will use, either 1040 or 1040A. Only thing that will be different in the form than that of those individuals who aren’t married is that you will have to write your spouse’s name and social security number.
Advantages of filing taxes jointly and drawbacks of filing separately: generally speaking, when you are married, you are better off filing jointly or MFJ; this one of the reasons people want to get married on legal paper. The tax benefits include lower overall tax bill because it makes you eligible for many tax breaks that aren’t available for singles. To be eligible for this type of tax return your status should have been declared married to your spouse at least by the last day of the year, and both decide to sign the return together. If the husband and wife have kids, they can claim dependents in their taxes very easily when filing jointly.
However, when a married couple file separately, they have to coordinate which dependents one of them can claim and usually it will be based on with whom the dependent children spent the most time. Your exemption amount will nearly be less than half of what is allowed for joint tax filers. The amount that you get to exclude from income under an employer’s dependent care assistance program is limited to $2500, which is $5000 if a joint return is filed. This much amount of money makes your tax return type worth carefully taking a look at.
Advantages of filing taxes separately and drawback of filing jointly: Married filing separately (MFS) helps one partner in the marriage owes a lot of money back in tax return while the other person can potentially get a huge tax refund. It is also helpful to file separately if your spouse has complicated taxes, possibly lying or cheating the IRS, that could potentially result tax return getting audited in few years and you don’t want to get involved. Therefore, the main benefit of married filing separate taxes is separate tax liabilities for the spouse and you.
Why file married filing separately type of tax return and not jointly? There are many people who are not together; they will have hard time figuring out what type of tax return to file. It is then best to get divorce finalized as soon as possible so they could take advantage of filing as a single person. Married filing separately is however a different as we explained above; you are still married but filing separate from your spouse. Here are some of the top reasons why married couples file taxes separately: one wants to file tax, while the other one doesn’t; one is self-employed and runs complicated business, other doesn’t want to get into the problems; one spouse owes tax bill, other expecting a tax refund check; the couple wants to be responsible for their own taxes, and you two are separated but not divorced yet.
Who qualifies for to file married filing separate tax returns? There are some qualification requirements that you need to satisfy if you are married but decide to file taxes separately from your spouse. This means you cannot take earned income credit nor can you take the education credits such as Hope, Lifetime learning and American opportunity credit and other student deductions like loan interest, tuition and fees. You will not be able to take credit for child and other dependent care expense in most cases. As a married but separate filer, your new home buyer credit will be $4,000, which is $8,000 if filed jointly with your spouse. However the tax credits may get reduced to what you would get if you do a joint return filing.
Therefore, as you see, if you are filing tax return married jointly together with your spouse, you may get better refund than filing returns separately or individually even though it is allowed by IRS. Also, even if you use the married filing separate status, you must enter your spouse’s name and Social Security number at the top of your 1040 form. An important tax tip for someone who is just learning the basics: always submit your tax return by April 15 to avoid penalty fees and incurring interest if you owe IRS any money. If however you have to amend your taxes, you have until mid October to file the tax, that’s the final last day.
Due to any disagreements between you and your spouse if you can’t file a joint tax return, then instead of filing married filing separate, you also have the option to file as Head of Household if you pay for more than half of the cost of maintaining the house and pay for child expenses.
PS: you cannot file as “single” if you are married; you can either file a joint tax or have an option to do “married filing separately status.” Usually, the joint returns are better options for many families and even for individual families, since it give you higher refund and IRS charges lower taxes. What I don’t know, however, is if you have complicated situation where a couple has a child together but they don’t really live together but at the same time not divorced either. One spouse makes more money than the other but the child lives with both; my understanding was that both cannot claim the child as their dependent if both husband and wife are filing taxes separately.
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