Married couples must decide whether to file jointly or separately when filing their taxes. This decision can significantly impact the overall tax liability, available tax deductions, and credits.
Married Filing Jointly Benefits
The IRS strongly encourages couples to file joint tax returns because it extends several tax breaks to those who do so. Filing jointly as a married couple can offer several advantages compared to filing separately.
- Higher Standard Deduction: The standard deduction is nearly double for joint filers compared to separate filers. This means you can deduct more income before calculating your taxable income, potentially lowering your tax bill. In 2024, the Standard Deduction for married filing jointly is $29,200 versus $14,600 if filing separately.
- Tax Credits: Joint filers are eligible for more tax credits, including the Earned Income Tax Credit, the American Opportunity Tax Credit, the Lifetime Learning Tax Credit, and the Child Tax Credit.
- Tax Brackets: Filing jointly is more favorable for wider tax brackets, meaning high-income individuals are taxed at a lower rate than those who file separately.
- One Return: Filing one joint return can be more accessible and less time-consuming than filing two separate returns. This can save you time, effort, and money.
Married Filing Separately Benefits
While filing jointly is often encouraged for married couples, there are certain situations where filing separately may be beneficial.
- High Student Loan Debt: If you're filing with someone who has high student loan debt, has claimed bankruptcy, or has a high tax payment plan with the IRS.
- High Medical Expenses: If one spouse has significant medical expenses exceeding 7.5% of their Adjusted Gross Income (AGI), they might not be able to deduct them when filing jointly fully. Filing separately allows them to potentially deduct the total amount if it exceeds 7.5% of their individual AGI.
- Tax Debt and Liability Concerns: If one spouse has a high tax payment plan with the IRS or has claimed bankruptcy, filing separately shields the other spouse from potential liability.
Considerations for filing separately
When deciding to file separately, please consider the following:
- Itemized Deductions: If you would like to file separately, you and your spouse must agree on how to divide the itemized deductions. For instance, you can split the home mortgage interest equally, but it's best to agree on this before preparing your taxes.
- Children: Generally, you may not claim the Child Dependent Care Credit. If you have children and file Married filing separately, you will each claim specific dependents; you cannot claim the same child, for example.
- Additional Costs: Depending on your Heard subscription, your return is included or at an additional cost if you are filing jointly. However, if you choose to file separately, your spouse will need to file outside of Heard.
- Roth Contributions: Separate filers typically can’t make Roth individual retirement account contributions because the modified adjusted gross income limit is $10,000.
- Capital loss deductions: The limit for the capital loss deduction is $1,500 for separate filers and $3,000 for joint filers.
- Community Property states include AZ, CA, ID, LA, NV, NM, TX, WA, and WI, which must characterize income as separate or community. Community income must be allocated to each spouse and usually includes income from both spouses. The allocated income is reported on both the federal and state returns.
We recommend using the 'What Is My Filing Status?' tool. - IRS Interactive Tax Assistant tool to help you determine which status will result in the lowest tax.
What is Heard’s fee if I file jointly with my spouse?
Personal federal and state income tax filings are included for sole proprietors.
For S-Corporations, your business returns are included. However, depending on your subscription, your personal tax filing may be included, or an add-on fee may apply.
There is no additional fee to file your tax return if you choose to file a married filing jointly. However, if you choose to file married filing separately, your spouse will need to file their annual tax return outside of Heard.