Tax Day (April 15) is inching closer.
And newly married couples face a big decision – choosing their tax filing status.
And there are pros and cons to both.
Most married couples file jointly.
For most married couples, filing joint tax returns will make the most financial sense.
Your filing status also impacts your income tax bracket, said Gregory King, certified public accountant atEmpower.
Your marginal rate is doubled if you and your spouse choose married filing jointly.
That may result in a bigger refund for your household.
But if you end up with an outstanding tax balance, both spouses will be responsible, said Steber.
When does it make sense to choose ‘married filing separately?’
Not many people file separately when they’re married, said Steber.
But there are a few exceptions when it could be beneficial.
You may also choose married filing separately if one spouse earns less income but has higher itemized deductions.
This can lower your tax liability, said Harrington.
Additionally, a married couple may choose to file this way if they’re approaching divorce or separation.
With this filing status, you and your spouse must choose whether to follow the standard deduction or itemize.
The earned income credit unless you have a qualifying dependent.
The exclusion or credit for adoption expenses in most cases.
The credit for the elderly or disabled if you lived with your spouse during the tax year.
The American Opportunity and Lifetime Learning credits.
The deduction for student loan interest.
And you’re able to’t exclude interest from savings bonds that you used for higher education costs.
You may also consult with a tax professional to better understand your options.
Most importantly, remember that your filing status must remain the same when filing state and federal taxes.
However, your filing status can change from year to year.
