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8 Reasons Why Filing Separately May be Right For You

Depending on your situation, Married Filing Separately could actually be the right filing status for you

Whether you’ve been married for decades or recently tied the knot, you probably share just about everything with your spouse. Bills, chores, children (or maybe just a pet), a house, the list of what couples share goes on and on.

Should what’s mine is yours, and what’s yours is mine also apply to your tax return?

For most couples, filing jointly means more tax incentives. However, this filing status isn’t for everyone. In fact, there’s reasons why filing separately may be a better idea.

When it’s a Good Idea to Choose Married Filing Separately

In most cases, you’ll find that filing a joint tax return ends up saving you and your spouse money. However, there are certain situations that when filing separately ends up being the better option. Below are eight reasons to file separately;

 1. You have a large amount of Medical Expenses:   In order to qualify to deduct medical expenses, they have to total more than 10% of your Adjusted Gross Income (AGI). That means, if your filing jointly and your Adjusted Gross Income as a couple  is $110,000, then the total of your medical expenses has to be at least $11,000. However, if your AGI is $40,000, and your spouse’s is $70,000, then when married filing separately, you could deduct your medical expenses as long as they  are at least $4000.

2. You’re Reporting a Long List of Employee Business Expenses: Like medical expenses, qualifications to report employee business expenses, such as mileage on your tax return is directly linked to your income. To deduct employee business expenses, they must total at least 2% of your income. In other words, this 2% will be a much larger number when taking into account your spouse’s income in addition to your own. Continue reading “8 Reasons Why Filing Separately May be Right For You”

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Is There An Advantage to Filing Taxes Jointly?

For most couples, it’s best to file taxes jointly. By doing so, there are advantages including tax breaks.

Are you wondering if you should file your taxes jointly or separately? For couples that have recently tied the knot and even for those who have been married for years, this is a very common question. For most couples, it’s best to file taxes jointly. By doing so, there are advantages including the IRS extending tax breaks.

For the majority of couples, the benefits of filing taxes jointly outweigh filing taxes separately. However, there are certain situations when it’s best to file separate returns. For example, couples with one spouse having a large total of medical expenses, filing separately may pay off.

The Need-to-know Facts

  • You may file jointly if you are legally married (if you were legally married on or before the last day of the year).
  •  By filing jointly, both individuals report all income, deductions, and credits onto one tax return.
  •  Upon deciding to file taxes jointly, both spouses must agree to file a joint tax return and both must sign the return.
  •  In the case that during the tax year your spouse has died, you still have the option to file jointly or separately.
  •  You are responsible for your spouse. According to the IRS from Publication 501 (regarding filing jointly):

“Both of you may be held responsible, jointly and individually, for the tax and any interest or penalty due on your joint return…One spouse may be held responsible for all the tax due even if all the income was earned by the other spouse.” Continue reading “Is There An Advantage to Filing Taxes Jointly?”

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How to File Taxes When Your Spouse Moved From a Different State

If your spouse moved from a different state, you might be unsure how to file your state taxes.

“In 2013 I was a full-year resident of New York State and got a W-2 in NY. However, my wife was a part-year resident of NY (the other state being Ohio) and got two W-2s, one from NY and one from OH. So for our NY State return are we full-year residents or not?”

You may find yourself in a situation like the example above. If so, the first important thing all married couples should note before they try to deal with a complicated state tax situation is that they can actually file separate state tax returns, even if they file a joint federal return.

Filing Jointly vs. Filing Separately

Most married couples will opt to file their federal taxes together, using the married filing jointly filing status, because it provides the greatest benefit. It’s only advantageous to use the married filing separately status in very limited situations.

Even though it makes sense to file a joint federal return, if your state situation is complicated enough, it may make sense to file separate state returns. 

Take the example listed above; the man’s situation is pretty simple- he was a resident of NY for all of 2013. It’s pretty clear that he has to file a NY resident return. This will tax him on all of his income for the entire year, no matter where it was earned.

His wife’s situation is more complex because halfway through the year she moved from OH to NY. This means that she needs to file an OH part-year resident return and then a NY part-year resident return.

Her OH part-year resident return will tax her on all of her income (no matter where it was earned) for that portion of the year that she was a permanent resident of OH. Her NY part-year resident return will tax her on all of her income (no matter where it was earned) for the portion of the year that she was a permanent resident of NY.

Some taxpayers may opt to go ahead and file a joint return even though one spouse was a part-year resident. It’s certainly more convenient, and if you moved early in the year, it probably won’t end up making that much of a difference. Plus it could actually end up saving you money on tax preparation fees.

Phew! That’s a lot of state tax information for one couple.

For more information about the supremely complicated world of state taxes, check out some of our other blog posts:

State Income Tax: Living in One State, Working in Another

Filing Taxes in Two Different States – What You Need to Know

Photo via Graham Fletcher on Flickr

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