Did this year take you down an aisle saying “I Do”?
Did you think about how you are going to file your income taxes while walking down the aisle? Probably not (in fact, I sure hope not).
But now you may be wondering what the advantages and disadvantages are for the specific filing options the IRS provides for being legally married.
Your Income Tax Filing Options
Your legal marital status on the last day of the tax year dictates your marital status for the entire year for income tax purposes.
For instance, if you are legally married on December 31, 2012, you are regarded as married for the entire 2012 tax year.
Taxpayers considered married on the last day of the tax year have three filing options:
- Married Filing Jointly
- Married Filing Separate
- Married Filing Joint on Federal tax return & Married Filing Separate on the State return
Married Filing Jointly – Advantages
In most cases, a Married Filing Jointly return has a lower tax liability compared to the Married Filing Separate return.
This stems from the fact that the Married Filing Jointly status can include various credits and deductions, listed below, which are not available to a taxpayer using the Married Filing Separate status.
- Earned income credit
- Education credits such as American Opportunity Credit or the Lifetime Learning Credit
- Education deductions such as Student Loan Interest and Tuition and Fees
- Adoption assistance credit
- Credit for child and dependent care expenses
- Credit for the elderly or the disabled
Married Filing Jointly – Disadvantages
Married Filing Jointly means each spouse is liable for income tax obligations, including taxes, interest and penalties.
However there are three types of relief from joint responsibility available:
- Innocent spouse
- Separation of liability
- Equitable relief
Married Filing Separate – Advantages
If you choose to file as Married Filing Separate when submitting your original return, you can amend to later change the filing status to Married Filing Joint.
Conversely, if you choose to file the original return as Married Filing Joint, you cannot amend to later change the filing status to Married Filing Separate after the filing due date, which is generally April 15th.
Married Filing Separate – Disadvantages
The Married Filing Separate filing status may limit certain credits or deductions on the return.
- Child tax credit
- Retirement savings contribution credit
- Capital loss deductions
If your spouse itemizes deductions, you cannot claim the standard deduction.
If you can claim the standard deduction, your standard deduction is half the amount allowed on a joint return.
Possible State Implications
The filing requirements for each state may vary; however, you can enter your information in to the TaxACT program to view which filing status would benefit you most.
You may need to check with your state first since many states require you use the same filing status that was used on the Federal return.
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