Marriage is a turning point in everyone’s life, affecting various things, including tax filing. Your filing status as a married person will determine your tax liabilities and refunds. The right choice regarding your filing status will help you pay less money. However, choosing the correct status needs to be clarified due to the changing nature of tax laws and regulations. Various filing statuses are available for married couples that we discuss in this article and help you find the most appropriate one according to your specific situation.
Single, married filing jointly, head of household, and the qualifying widow with the dependent child are the filing statuses recognized by the IRS. Your financial and private circumstances will determine filing jointly or separately as a married individual.
It is a common filing status that many couples use. In this case, the couple will combine their income, deductions, and credits, and everything will be filed on one return. This status is perfect for couples where one has more revenue, and this difference in income is significant. Filing jointly has various advantages, including the ones below: 1- The standard deduction in this status will be higher, so married couples will reduce their taxable income by a considerable amount, leading to decreasing tax liabilities.
2- The IRS tax brackets are friendlier to married couples who file jointly. The tax rates are lower for married couples, which means fewer tax liabilities.
3- Filing jointly will lead to more tax credits, and you will be qualified for options like Earned Income Tax Credit, Child Tax Credit, etc.
This status is a proper choice for couples who want to keep their financial issues separate or protect themselves against the liabilities of their spouses. In this case, you will have an individual tax return and report your income, deductions, and credits separately. This status is an appropriate option for couples with considerable income differences or those who have legal or personal reasons to keep their status separate. Remember that filing separately has some disadvantages, including the following ones: 1- The tax rates are higher for couples who file separately, and it means paying more taxes. 2- Filing separately will lead to fewer tax credits, and you won’t be qualified for some credits like Adoption Tax Credit or Earned Income Tax Credit.
3- Filing separately limits the deductions you can claim; for example, if one spouse itemizes the deduction, the other spouse has to do the same.
It is a status for unmarried people who provide a residential place for an eligible dependent like a kid or a relative. But some married individuals are qualified for this status in some cases. They have to meet specific requirements to be eligible for this. The requirements are as below:
1- Living without their spouse for at least half a year.
2- Paying over half of the expenses of the family.
3- If a qualified dependent lives with them for over six months.
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The status is for people who have lost their spouse and have a dependent kid. It would be best if you met the following expectations to be qualified for this filing status. Here are the criteria you need to have:
1- Spouse’s death within the last two years.
2- Having a dependent child and not remarrying.
You can file as a qualifying widow with a dependent child if you have the above criteria. The benefits for this status are the same as married filing jointly, which means higher standard deductions and fewer tax liabilities.
You must pay attention to various financial and personal circumstances to choose an appropriate filing status as a married couple. It would help if you considered numerous factors to make a proper decision. The following factors are some key things to bear in mind:
1- If your income differs considerably from your spouse’s, joint filing will decrease your tax liabilities. However, separate filing might be better if your income is similar.
2- If you have considerable itemized deductions, filing separately is recommended to maximize the deductions you can claim.
3- Filing jointly is also beneficial for individuals with children or dependents because they might qualify for more credits.
4- Some spouses have legal and personal considerations to keep their finances separate and must choose to file separately, even if they have to pay more taxes.
When you file your tax return, it won’t be changed for that year. So, you have to consider the different options before filing. Choosing the best status can significantly affect your tax liabilities and refunds. Joint filing can be a perfect option for spouses with different incomes. Separate filing can be better if the revenues are similar or you have personal and legal considerations. It is recommended to consult with tax professionals to make a proper decision and choose the best filing status. Tax laws and regulations constantly change, making it hard for ordinary people to keep up with these updates. Therefore, seeking professional help is always a good idea and maximizes profits. Choosing the wrong filing status will lead to more tax liabilities and rates, something unpleasant that you can avoid easily.
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