As tax season looms ahead, it’s time for couples to decide whether they want to file jointly or separately. The majority of couples will file jointly. There are simply more benefits for most people if they file jointly as opposed to filing separately.
Under the new tax laws, filing separately will give you a standard deduction of $12,000 each, while filing jointly will give you a standard deduction of $24,000. However, there are many other benefits to filing jointly.
There are various credits available to couples. One is the child and dependent care credit. If you adopt a child, you can get credits for that as well.
However, there are some situations where you may want to file separately. If you are going through a divorce and/or are separated, both of you may wish to file separately even though you are legally married.
Another reason why you may want to file your taxes separately is to avoid potential liabilities. If you file jointly, you will be held responsible together. If you have a reason to believe that your spouse is being dishonest about their income, amount of taxes owed, or deductions or that they are otherwise untrustworthy, you can file separately to shield yourself from potential IRS action.
Another reason spouses may wish to file separately is if there are deductions that you don’t qualify for when filing jointly. Some deductions are not applicable if your Adjusted Gross Income is above a certain amount. You may find that if one of you has a very low income and the other has a very high income, combining your returns will put you in a higher tax bracket. However, if the spouse who is earning less has significant medical expenses, personal casualty losses, charitable contributions, or other deductions that are limited by a higher AGI, filing separately can be beneficial. Contact us today for help.