Should You File Your Taxes Jointly?
August 2018
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Should You File Your Taxes Jointly?
How to determine if filing jointly or separately is right for you and your spouse

Congratulations on finding your soul mate and joining together in matrimony. No doubt, you and your significant other have considered a number of important financial decisions prior to tying the knot, including whether you should share a bank account or start saving for a little one’s college fund. One of the biggest questions you’ll face will come next tax season when you’ll need to decide whether you prefer to file separately or jointly.  

Do you qualify?

Married filing jointly and married filing separately are two of the five filing statuses offered by the IRS. To qualify for either, you must have been officially married at some point in the year for which you are filing — if you will be filing taxes for the year 2018, you and your spouse must have been married prior to Jan. 1, 2019. If you are legally joined in matrimony on New Year’s Eve, you are considered married for the entire preceding year and are eligible to file as such.

The benefits of filing jointly

Per the IRS, filing jointly simply means you and your spouse will combine your incomes, exemptions and deductions into the same tax return. You can file jointly even if you or your spouse had no income or deductions for the year.

Intuit Turbotax suggests that filing jointly is by and large the right decision for you and your spouse if you intend to take the standard deduction. More often than not, this will net you and your spouse a bigger return than you’d receive if you would both file separately.

Filing jointly also opens you up to qualifying for significant tax credits, including the Earned Income Credit, American Opportunity and Lifetime Learning Education Credits and Child and Dependent Care Credit. Filing separately also halves your capital loss deduction limit and limits the maximum contribution amount available for your IRA.

When to file separately

Filing separately may be the best course of action if you and your spouse make comparable income. As The Balance’s William Perez points out, two individuals who make $50,000 each would pay a 12 percent rate on their respective income if they were to file separately. If they filed jointly, that would bump them into the $77,401 to $165,000 tax bracket, which would see every dollar they made over the minimum threshold taxed at 22 percent.

There is also the matter of shared responsibility for any inaccuracies in your tax return. The IRS maintains that married couples are held responsible both jointly and individually for any interest or penalties due as result of an incorrect filing. If your spouse is unable to pay the debt owed to the IRS, you will be on the hook for it — even if it was through no fault of your own.

There is no true right or wrong answer to whether you and your spouse should file jointly or separately. As such, Intuit Turbotax recommends taking the time to prepare your taxes both ways. This will enable you to see which option saves you the most money, which in and of itself is well worth the added hassle of spending extra time on your taxes. If you are still uncertain, you can contact a tax professional and have them guide you to the best choice.

Published by Heritage Bank of Nevada
Copyright © 2018 Heritage Bank of Nevada All rights reserved.
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Disclaimer - All content contained in this newsletter is for informational purposes only and should not be relied upon to make any financial, accounting, tax, legal or other related decisions. Each person must consider his or her objectives, risk tolerances and level of comfort when making financial decisions and should consult a competent professional advisor prior to making any such decisions. Any opinions expressed through the content in this newsletter are the opinions of the particular author only.
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