Marriage is a significant life event. And it's one that often brings many changes, including how you file your taxes. While filing jointly may seem like the obvious choice, the options between filing jointly and separately as a couple have their own advantages and disadvantages.
Understanding the differences between filing jointly vs. separately can help you make the right decision for your new family's needs. Here's a closer look at each option and what each scenario may mean for your tax bill. What are the married tax filing statuses? One of the most common questions about taxes after marriage is what happens to your tax status. When you get married, you'll have access to two primary tax filing statuses: married filing jointly and married filing separately.
The choice between these statuses can impact your tax rates, access to credits and eligibility for deductions. For example:
- Tax rates — Depending on your combined income, filing jointly may place you in a different tax bracket than filing separately.
- Access to credits — Certain tax credits may have income limits or other eligibility requirements that can depend on your filing status.
- Eligibility for deductions — Some deductions may be phased out or unavailable altogether if your income exceeds certain thresholds, which can vary depending on filing status.
These filing statuses are available to any couple married by December 31st of the tax year.
If you're unsure which status to choose, the Internal Revenue Service (IRS) provides a helpful filing status tool to help guide you through the decision-making process.
Married filing jointly
When filing jointly, you and your spouse combine your income, deductions and credits on a single tax return. This means you'll share refunds and have joint responsibilities for any taxes owed.
It's often a popular option for couple finances because it may lead to a lower overall tax burden and simplify the filing process. However, it's important to remember that both spouses are equally liable for any errors or omissions on the return, even if only one spouse prepared it.
Married filing separately
Opting to file separately means you and your spouse each file your own individual tax returns. This approach can be beneficial in certain situations, like when one spouse has significant medical expenses or you both want financial independence.
However, it can come with some limitations. For example, both spouses must either itemize deductions or take the standard deduction. One spouse can't itemize, while the other takes the standard deduction.
Filing separately may impact your eligibility for certain deductions and credits, such as the individual retirement account (IRA) contribution deduction, student loan interest deduction and capital loss deduction.
It's important to weigh some of these nuances before deciding.
What are the benefits of filing taxes jointly?
For married couples, there are benefits of filing taxes jointly over filing separately.
Filing a single tax return is generally more straightforward and less time consuming than preparing and filing two separate returns. In many instances, joint filers often benefit from lower tax rates and a higher standard deduction, which can lead to tax savings. Also, some tax credits are only available to couples filing jointly.
Here's a closer look at some considerations when deciding how to file.
Tax credits
Married couples filing jointly may take advantage of several tax credits that might not be available to those filing separately. These credits can help lower your tax bill.
Here are some key tax credits to consider:
Earned income tax credit (EITC) — This refundable credit is for low to moderate-income workers and families. The maximum credit amount for 2024 is $7,830. Eligibility depends on income, filing status and the number of qualifying children.
Child tax credit — This partially refundable credit provides up to $2,000 per child. Some couples may qualify for an additional tax credit, but this credit phases out for higher-income earners.
Child and dependent care credit — This credit helps offset costs for child care or care for a dependent with disabilities.
American Opportunity Tax Credit (AOTC) — This credit supports educational expenses for the first four years of post-secondary education. However, it has income limits.
Lifetime learning credit: This credit is available for qualified education expenses and isn't limited to the first four years of post-secondary education.
Saver's credit — This credit helps encourage retirement savings by offering credits for contributions to retirement accounts. It is income dependent and has maximum income limits.
Eligibility and credit amounts can vary based on income and specific circumstances. Consulting a tax professional can help you claim all the credits you're entitled to under your filing status.
Standard deduction
The standard deduction is a fixed amount you can subtract from your taxable income, lowering your taxable income. It's a benefit for taxpayers, and married couples filing jointly get an even bigger standard deduction than those filing separately.
For the 2024 tax year, the standard deduction for married couples filing jointly is $29,200. So, couples can deduct $29,200 from their taxable income to reduce how much they may owe in taxes.
By claiming the standard deduction, married couples who file jointly can reduce taxable income and potentially their tax bill.
When should I consider filing separately?
While filing jointly can be advantageous for many married couples, there are some circumstances where filing separately may make more sense for your needs.
For example:
Disparate incomes — If one spouse makes significantly more than the other, filing separately may lead to a lower overall tax bill since it prevents the higher earner from being put into a higher tax bracket due to the combined income.
Claiming certain deductions or credits — Some deductions and credits have income limitations that might be more easily met when filing separately — for example, the student loan interest deduction phases out at lower income levels for joint filers.
Here are a few specific scenarios where filing separately as a couple may be more beneficial:
Significant medical expenses
If one spouse has substantial out-of-pocket medical expenses, filing separately may make it easier to reach the 7.5% adjusted gross income (AGI) threshold required to deduct medical expenses.
Imagine Kara has an AGI of $60,000 and $6,000 in medical expenses. Filing separately would allow her to deduct a portion of these expenses. If she filed with her spouse, Leon, who has an AGI of $40,000, she couldn't deduct anything because their combined expenses wouldn't exceed 7.5% of their combined AGI of $100,000.
Student loan Income-Driven Repayment (IDR) plans
If one spouse is on an IDR plan for their student loans, filing separately could reduce the monthly payment since the calculation is often based on AGI.
For example, Ryan has an AGI of $50,000 and is on an IDR plan. His monthly payment would likely be lower if he filed separately than if he filed jointly with his spouse, Julian, who has an AGI of $75,000.
Before deciding, it's important to weigh the potential benefits and drawbacks of filing separately. Consulting with a qualified tax professional can help you understand how these scenarios may impact your situation.
Is it better to file jointly or separately?
Whether to file jointly or separately depends on your unique financial situation. There is no one-size-fits-all answer.
One way to determine if it is better to file jointly or separately is to prepare your taxes both ways and compare the results. While it may take more time and effort, it can give you a clear picture of any potential refunds or balances due under each option.
Here's a table with the 2024 tax rates and taxable income brackets for married couples filing jointly vs. separately, which may help you run the numbers:
10% tax rate:
- Jointly — Income up to $23,200
- Separately — Income up to $11,600
12% tax rate:
- Jointly — Incomes over $23,200
- Separately — Incomes over $11,600
22% tax rate:
- Jointly — Incomes over $94,300
- Separately — Incomes over $47,150
24% tax rate:
- Jointly — Incomes over $201,050
- Separately — Incomes over $100,525
32% tax rate:
- Jointly — Incomes over $383,900
- Separately — Incomes over $191,950
35% tax rate:
- Jointly — Incomes over $487,450
- Separately — Incomes over $243,725
37% tax rate:
- Jointly — Incomes over $731,200
- Separately — Incomes over $609,350
While the tax brackets are consistent, the income thresholds for each bracket are much lower for married couples filing separately. This highlights how filing status can impact how much taxes you owe, especially if there's a big income difference between spouses.
Key takeaways
- Marriage can change your tax filing options, allowing you to file jointly or separately.
- Filing jointly often offers benefits like lower tax rates and access to certain credits.
- Filing separately may be a consideration in specific situations, such as when one spouse has high medical expenses or is on an income-driven student loan repayment plan.
- It's important to weigh the pros and cons of each filing status and consider consulting a tax and financial professional for personalized advice.
Ultimately, your best choice depends on your unique financial situation and needs. Carefully review your options and ask for professional help when needed. That way, you can make an informed decision that aligns with your needs and have more confidence come tax time.
