Posted by Aurelia E Weems CPA

Married, Filing Jointly, Status: Is it the Right Choice?

Married, Filing Jointly, Status: Is it the Right Choice?

Going through the joint filing route with your spouse might qualify you for a high standard deduction and bring down your tax bill. You might also get tax benefits that couples going through the separate route doesn’t have. However, going through the joint route makes both teams responsible for the tax, interest, and penalties.

This article explores essential things to know about the jointly filing route for couples:


Married Filing Jointly Status: Eligibility and Operation?

Married couples have the option of sending in a single tax return. With this route, your deductions, credit and income will be reported on a single federal return for the year, even if only one partner had income. Also, the dependents will be listed by both parties on the return, and their Social Security number will reflect with their signature as well. 

Provided you meet the following conditions, you are free to go by the joint filing route for couples.

  • As of December 31, you were married, even if both of you lived under a different roof.

  • You lost your spouse to death in the tax year and did not remarry, then

  • While you were married when the tax year ended, your partner died the following year before you could file a return. 

The joint filing route is not an automatic status for all couples. The following situation explains when couples will not be able to go through this route:

  • You were divorced before the tax year ended, even though you were once married. As a result, Uncle Sam considers you unmarried and ineligible for the joint status route.

  • Either you or your spouse is a nonresident alien in the year

For people who lost their spouse in the last two years and did not remarry, you met several other requirements alongside the presence of a qualifying child; we recommend the qualifying widow(er) status. Even though it is different from the joint filing route, some tax benefits are similar to the joint filing status.


Examining the Pros and Cons of Joint Filing 

Married filing jointly status might not be the best for all couples.

 

Pros of Married Filing Jointly 

For couples, joint filing could translate to a huge tax refund or a lower tax liability in general. In addition, you get a higher standard deduction, and you qualify for other tax benefits, which are unavailable to other filing statuses. Joint filers also get a huge tax deduction and credit. 

Taxpayers who have to pay the Alternative Minimum Tax will do better going jointly. For 2021, joint filers and the surviving spouse have their AMT exemptions at $114,600. Single filers have the exemption at $73,600. 


Cons of the Joint Filing Route 

There is the marriage penalty in which spouses pay higher compared to singles. 

Also, couples have to deal with joint and several tax liabilities. With this, each spouse is held accountable for taxes owed alongside penalties and interest that might arise from such joint return. This holds even if you do not report an income or you were later divorced.

 

Cases When Married Filing Separately Will make Sense 

Marriage involves the coming together of two people in love to become one. Spiritually, they become one alongside their finances. While filing jointly comes with some tax advantages, it is not for everyone. 

Happily married couples might prefer to file separate returns and not one, and there are cases when this is the right call for such couples. 

For instance, if one partner has an income-based repayment plan for a federal loan, which is a factor of the partner's income, not the spouse, the separate route might be best. With this route, however, be ready to sacrifice education credits and student loan interest deductions.

Also, for couples that prefer to have separate finances for reasons best known to them, or they are trying to avoid being accountable for the other's tax obligation, a separate route might be best. 

In a situation when one of the partner's refunds could be directed to offset child support, tax debt, or any other debt, separate filing might be best to allow the other party to keep their refund. Also, for couples that have a huge difference in their earnings, filing separately will be best. 


FOR MORE INFORMATION ON HOW AURELIA E WEEMS, CPA. CAN BEST HELP YOU WITH YOUR TAX FILING NEEDS, PLEASE CLICK THE BLUE TAB ON THIS PAGE.


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