“Wedded Bliss and Taxes: How getting married and how you file (jointly or separately) affects how much you will owe in taxes” is a guest post offered by H&R Block’s Leigh Mutert, CPA and hrblock.com Community Manager.
She’s also given us FREE copies of H&R Block Federal Premium Edition! It’s tax season time and who wouldn’t want something premium for free :) We’re giving away FOUR copies. To enter – Comment, Like, & Tweet this article! The winners will be announced on Sunday, Feb. 20th.
How you file can mean tax savings in your pocket.
Marriage means compromise. It means negotiation. It means having to decide a million things as a couple: where to live, when to have kids, how to juggle the holidays between all the in-laws.
Your status on the last day of the year determines your filing status for the entire year. If you’re married, you and your spouse can choose to file a joint return or file separate returns. Unless you are required to file separately, you should figure your tax both ways (on a joint return and on separate returns) to determine which filing status is best for you.
Most taxpayers claim the standard deduction — a fixed amount that reduces the income on which you are taxed. Here are the standard deduction amounts according to filing status.
- Single or Married Filing Separately: $5,700
- Married Filing Jointly or Qualifying Widow(er): $11,400
Married Filing Jointly
You can choose Married Filing Jointly as your filing status if you’re married and both you and your spouse agree to file a joint return. With a joint return:
- You report your combined income and deduct your combined allowable expenses.
- Your tax may be lower than your combined tax for the other filing statuses.
- You may qualify for tax benefits that would not apply if you filed separately.
Married Filing Separately
This filing status may benefit you if you want to be responsible only for your tax or if it results in less combined tax than filing a joint return. With separate returns:
- You generally report only your own income, exemptions, credits and deductions on your individual return.
- You can claim an exemption for your spouse if your spouse had no gross income and was not the dependent of another person.
You may become ineligible for tax credits and deductions you received in the past.
Because of your newly combined income, you may lose benefits (such as the Earned Income Credit and the Child Tax Credit), you were able to claim before you were married, especially if you filed as Head of Household before the marriage. Remember, tax credit is a valuable, dollar-for-dollar reduction of the tax This Earned Income Credit Table for 2010 can help you determine how much you can receive in these child-related tax credits.. Using the Child Tax Credit Table you can see if you are eligible for the full credit amount of $1,000 per child based on your income and filing status.
Compare taxes when filing separately versus jointly.
You will generally pay more combined tax on separate returns than you would on a joint return because you are not able to claim as many credits and deductions. This quick and easy tax refund estimate calculator is one way to see the affect of how you choose to file.
You can do your taxes at home with H&R Block’s online tax prep software that because it identifies all deductions and credits you are entitled to and guarantees accuracy and the maximum refund. Through March 31, H&R Block will take a second look at your tax returns from the past three years to see if there is tax refund money you missed—for free, no matter who prepared your taxes.
If you are still unsure about how to file, take your latest pay stubs along with last-year’s tax returns to a tax professional to have a pro forma joint return prepared. Be sure to let the tax pro know about any items that will be different. For example, if neither of you owned a home and you are buying one, the tax pro will take the interest and taxes you expect to pay into account.
If the pro forma joint return results in a balance due and this is unsatisfactory to you, you can increase your withholding by filing new Forms W-4 or by making estimated tax payments to cover the expected balance due. You can always get a free 30-minute consultation with a tax pro at an H&R Block office near you, and determine what’s best for your situation.