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Tax Benefits For Couples Filing Jointly vs Separately

Getting married can mean big changes in your financial life. As well as deciding whether or not you should open up a joint bank account, you will need to decide how you will file your taxes. Married couples have two main options - filing jointly or filing separately. Your choice can have huge implications for your year-end tax return, so it is important that you pick the correct option.

Given the importance of the decision, our Atlanta CPAs have put together a handy guide to help you choose which designation makes the most financial sense for you and your family.

The Advantages Of Filing Jointly

Our accountants are experts in Atlanta marriage taxes and can say with confidence that married couples are almost always better off filing their taxes jointly. In other words, filing jointly usually means that you will pay less tax. There are a number of reasons for this, such as:

  • Standard Deduction

When a married couple files jointly, they will be able to apply their standard deduction ($24,000 in 2018) to their overall income instead of each person's individual income. This means that it will always be applied to the highest-taxed income first. As a result, couples who file jointly usually have a lower marginal tax rate than ones who file separately.

  • Tax Credits

Married couples who file jointly are often eligible for tax credits that can further reduce their overall tax liability. These credits might include the Earned Income Tax Credit, the Child and Dependent Care Tax Credit, the American Opportunity Tax Credit, or the Lifetime Learning Education Tax Credit. These credits can put hundreds or even thousands of dollars back in your pocket during tax season, but they are extremely difficult (or even impossible) to qualify for if you file your taxes separately.

  • Retirement Contributions

Couples who are trying to save for their retirement may find that filing jointly can make the process a lot easier. This is because couples who file separately are subject to much more stringent and complicated rules when it comes to their Roth IRA contributions. Joint filers simply need to stay within their income-based contribution limits.

When Filing Separately Might Be Advantageous

Though filing jointly is almost always the best option, our experience in Atlanta marriage taxes has given us some insight into a few unusual situations where you might be better off filing separately. For example, individuals who are paying off a student loan on an income-based repayment plan may find it beneficial to report their lower, individual income to the IRS rather than their higher, joint income. In doing so, their monthly IBR payments may be lower.

Filing separately might also be a good idea for people who have incurred a significant amount of medical debt throughout the year. The IRS will allow you to deduct medical costs that exceed 7.5% of your total income (increasing to 10% in 2019). In these situations, it may be a good idea to reduce your reported income by filing separately. This might allow you to deduct more of your medical expenses.

As mentioned, filing jointly is the superior option for the vast majority of couples. However, each situation is different and the math may work out differently for you than it does for your neighbor. With this in mind, our Atlanta CPAs are standing by and ready to help you choose the filing designation that makes the most sense for you.

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This blog article is not intended to be the rendering of legal, accounting, tax advice or other professional services. Articles are based on current or proposed tax rules at the time they are written and older posts are not updated for tax rule changes. We expressly disclaim all liability in regard to actions taken or not taken based on the contents of this blog as well as the use or interpretation of this information. Information provided on this website is not all-inclusive and such information should not be relied upon as being all-inclusive.