For a married couple who are deciding whether to file jointly for tax returns, there are some factors to be considered first. In most cases filing for joint tax return will save you tax money. Two of the status options couples get at the end of the year are either filing jointly when married or filing separately. Here is a guide on all you need to know about filing a joint tax return when married.
Filing jointly gives a bigger tax due. Filing separately brings higher taxes and benefits such as Education benefits, Adoption credit, Earned income credit, Child and Dependent Care Credit cannot be claimed. The benefits gotten by married couples who have filed jointly for Child Tax Credit, Personal exemptions and itemized deductions are cut in to half.
Among the facts about all you need to know about filling a joint tax return when married is that your tax return shows a single taxable income number inclusive of you and your spouse’s earnings. Each of the six brackets, which each imposes a separate tax rate on definite parts of the taxable income. As your taxable income advances past each tax bracket tax rates, tax rates rises.
The advantage of filing jointly compared to separately is the fact that every single tax bracket covers a larger range of taxable income than when married couples file separately. This implies that the combined income that can be subjected to lower tax rates is higher. The Hillhurst Tax Group explain that these will most of the time raise a lower tax bill compared to adding up separate tax bills and the larger the diversion between you and your spouse’s income, the more savings you will accrue by filing jointly.
Filing a joint return further reduces your taxes through itemizing deductions as well as taking all the valid tax credits are eligible for as a couple. This is due to the fact that filing for a separate return result to the IRS imposing noticeable restrictions on your capability to particularize deductions and take tax credits. One disadvantage of filing jointly is the fact that you and your spouse are individually responsible for all due tax and not only the tax that describes your own income.
For example, if one partner earns $60,000 and the other earns $120,000, although the first one earns only a third of the total income, they are exclusively responsible for the tax due on $170,000 in case the other partner is unable to pay. However, the IRS can bestow various kinds of aids that either gets rid of the joint liability or cuts own the quantity of tax you are expected to pay.