Should Newlyweds File Their Taxes Together?

by Tamila McDonald
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should newlyweds file taxes together

When a couple gets married, many believe that fully combining their financial lives is best. Often, filing their taxes together seemingly just comes with that territory. Most newlyweds don’t give that decision a second thought. However, there are situations where filing your taxes together might not be the best financial move. If you’re wondering whether newlyweds should file their taxes together, here’s what you need to know.

Making Sure You’re Eligible

Before newlyweds file taxes together, you need to determine which status applies to you. The timing of your marriage has an impact on that. If you weren’t married until the start of the new year, you can’t file as married for the previous tax year.

For example, if you were single throughout 2021 and didn’t get married until January 1, 2022, or later, you can’t file your 2021 taxes as married even though the filing deadline isn’t until mid-April 2022. However, if you were married on or before December 31, 2021, you file as married for the 2021 tax year.

Ensuring you check your eligibility before you file is essential. Otherwise, you may choose the wrong status, leading to a potential issue down the line.

The Benefits of Married Filing Jointly

It’s important to note that filing jointly is the best financial move in the majority of situations. Couples typically get access to more deductions and credits, allowing them to reduce their joint financial burden significantly.

For instance, filing separately may mean you can’t access student loan interest deductions, certain educational credits, and specific earned income credits. By filing jointly instead, you can capture those sources of potential savings.

Another issue that arises if you file separately involves itemization. If one spouse itemizes when you file separately, the other is required to, as well. If the second spouse doesn’t have enough deductions to benefit from itemization, their tax bill goes up, potentially significantly.

There are also some complexities for those living in community property states if you file separately. In some cases, how you divide income in those states negates any potential financial gains from a separate filing. As a result, filing jointly may be the better move since it makes things easier and doesn’t mean missing out on any financial benefit.

If there is a dramatic difference in income between the two spouses, filing jointly usually results in a financial gain. The spouse with the higher income may have more of their earnings fall into a lower tax bracket. That causes them to owe less in taxes than they otherwise would, leading to a smaller tax bill or higher refund.

Plus, filing together simplifies your financial lives at tax time. You don’t have to worry about two separate filings, including divvying up certain deductions between you, making it easier to handle everything quickly and correctly.

When Married Filing Separately Is Potentially a Smart Choice

There are some situations where going the married filing separately route is actually a better choice. First, if you’re concerned that your spouse isn’t filing accurate information, filing separately can give you protection against their mistakes or misdeeds.

Second, there can be situations where you can come out financially ahead with separate filings. For example, if both spouses have enough deductions to itemize and at least one spouse remains in a lower tax bracket by filing separately, the math may work out in your favor overall.

Finally, if one spouse is past due on a financial obligation that could result in a whole or partial refund seizure, filing separately could be wise. That allows the other spouse to keep all of their refund without having to do any extra paperwork. However, if you prefer to file jointly, you can often file an IRS Form 8379 to ensure the spouse that isn’t responsible for the debt gets to keep their portion of the joint refund.

How to Determine Which Option Is Best

While spouses should always file separately if they’re concerned their spouse is misrepresenting themselves on their taxes, it isn’t always easy to determine which approach is best at a glance from a purely financial standpoint. As a result, the simplest way to decide whether to file jointly or separately may be to prepare returns using both approaches.

Typically, you can create profiles using tax software without having to pay right away. Instead, you only owe money when you file. Since that’s the case, you can fill out the forms using both approaches. Then, you can compare the total amount owed or the size of the refunds to see if one strategy is better financially than the other.

You may be able to do the same thing if you work with a tax professional when you file. Simply let them tax pro know that you’re unsure of which option is best and would like to see how each approach would pan out. Then, they can work with you to gather any necessary information and divide up earnings, credits, or deductions. After that, they can perform the needed calculations for each scenario, allowing you to see which option works best.

Just keep in mind that if you use a tax professional for the analysis, that could cost more than filing otherwise would. You’ll need to look at the fee structure to determine levy chargees, ensuring you aren’t caught off guard.

Similarly, if you don’t qualify for a free filing option, going the married filing separately route potentially doubles the cost of filing for the couple. Both spouses will have to pay the associated fee, so factor that into the equation as you work to determine which option is genuinely best.

You Don’t Have to File the Same Way Forever

Lastly, it’s critical to understand that the decision you make today doesn’t impact every filing you make hereafter. You could file jointly one year, file separately the next, then file jointly again after that. Essentially, with every new return, you get to choose again.

As a result, you’ll want to reassess your tax situation annually, ensuring you use the best approach every year and not just this one. When in doubt, always prepare your taxes both ways whenever your financial situation changes or tax laws change, allowing you to make sure that you’re using the wisest strategy throughout your marriage.

Should newlyweds file their taxes together? Why do you think? Share your thoughts in the comments below.

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