Once you get married, one of the many things to figure out is how to file taxes as a married couple.  We had heard about filing jointly or separately, but weren't sure which option was best for us.

After researching and speaking with professionals, we learned that there are pros and cons to each method. A married couple can file taxes separately but it may not be the best option depending on their situation.

At first glance, it may seem like a straightforward choice: either file together as a couple or separately as individuals. However, there are several factors to consider before making this decision.

For example, your income level, tax deductions and credits, and even state laws can all play a role in determining which route is most advantageous for you. So if you're wondering whether you can file taxes separately as a married couple or not, keep reading we've got you covered!

It should go without saying but we are not tax professionals and this is not tax advice for your specific situation. For your specific situation, you should definitely consult a tax professional.

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Understand the Options for Filing Taxes as a Married Couple

There are two main options available: filing jointly or separately. When you file jointly, both spouses report their income and deductions on one tax return.

This option is often beneficial because it can result in a lower overall tax bill due to certain tax credits and deductions being available only to joint filers. It can also make things easier since one spouse does the return counting for both.

In our house, it's no surprise that Phil takes care of filing taxes. By filing jointly, Kelsey doesn't have to worry.

However, there may be situations where filing separately makes sense. For example, if one spouse has significant medical expenses or other itemized deductions that exceed the standard deduction amount, it may be more advantageous for them to file separately.

Additionally, if one spouse has unpaid debts or liabilities that could affect the other's tax refund, filing separately can protect the innocent party from such negative consequences. Another reason to possibly file separately is for income-based student loan repayment plans.

Oftentimes your payment plan is based on your income and if you have two people together on one tax return, you will be pulling in more money and paying more monthly money towards those loans. This can be especially beneficial for loan forgiveness but it's important you talk to a financial advisor for your exact situation.

It's important to note that choosing to file separately can have some tax implications. For instance, both spouses must use the same method of deduction (either standard or itemized) and cannot switch between methods during the same tax year. Also, certain tax credits and deductions may not be available when filing separately, such as the earned income credit and student loan interest deduction.

Factors to Consider When Deciding How to File

There are many different factors that go into deciding how to file your taxes and it can get really complicated really quickly. We tried to simplify it by discussing just four different factors below and starting your research from there.

Income Level

Although it may not be the most advantageous option, a married couple can choose to file their taxes separately if their income levels are vastly different. This is because the tax brackets for married filing separately aren't as favorable as those for married filing jointly.

However, if one spouse has significantly more income than the other, filing separately could result in a lower overall tax bill. It's important to note that while filing separately may seem like a good idea, it does come with some drawbacks.

For example, couples who file separately may miss out on certain tax credits and deductions that are only available to those who file jointly. Additionally, filing separately could lead to higher taxes on Social Security benefits or capital gains.

Eligibility for Tax Credits

If you have children, it's worth noting that the Child Tax Credit can provide up to $2,000 per child under the age of 17. This credit is available to families with incomes up to $400,000 and can be claimed even if you owe no taxes. However, if a married couple files their taxes separately, they may not be eligible for this credit.

In order to qualify for the Child Tax Credit, both spouses must file jointly and meet income requirements. Other tax credits are also affected by filing separately as a married couple. For example, the Earned Income Tax Credit (EITC) has income limits based on your filing status.

If you file your taxes separately from your spouse, you may not be eligible for this credit at all. Additionally, some education-related tax credits also have restrictions when it comes to filing separately.

It's important to carefully consider all available tax credits and eligibility requirements before deciding whether or not to file taxes separately as a married couple.

Liability for Spouse's Tax Debt

You and your spouse share joint liability for any tax debt incurred during your marriage. This means that if either of you fails to pay the taxes owed, the IRS can pursue collection efforts against both of you.

Even if only one spouse earned income and filed a separate tax return, both parties are still responsible for paying any outstanding taxes. Don't think you are in the clear just because you filled separately.

The consequences of spouses' joint liability for tax debt can be significant. If one spouse owes back taxes or penalties, the IRS may seize wages, bank accounts, or other assets owned by either party.

Additionally, the unpaid balance will continue to accrue interest and penalties until it is paid in full. It's important whether you file jointly or separate to trust your spouse and have open communication about who owes what and how it is being paid.

Itemizing Deductions

Itemizing deductions can be a great way to lower your taxable income and potentially increase your tax refund. Maximizing deductions is especially beneficial for married couples who file their taxes separately, as it could help reduce the total amount of taxes owed.

It's important to understand the tax implications of itemizing deductions.

Some things to consider that can help maximize deductions include medical expenses, mortgage interest, state and local taxes, charitable donations, and investment-related expenses. Other factors might include work-related expenses such as union dues, moving costs, or job search costs.

It's important to note that in order to itemize deductions, they must exceed the standard deduction set by the IRS each year. Therefore, it may not always be beneficial to itemize deductions depending on individual circumstances.

How to File Taxes Separately

While we haven't filed our taxes separately, we have done enough research to have a pretty good understanding of it. It should go without saying but we are not tax professionals and this is not tax advice for your specific situation.

For your specific situation you should definitely consult a tax professional.

Forms and Considerations Before Filing

As a married couple, you have the option to file taxes separately using Form 1040, which is the same form you would use if you are filing jointly. When it comes to forms, you really are not going to find too much of a difference between filing together or separately.

The other thing to consider before even starting on the forms is whether it is worth it to file separately. You can always start and see where you end up taxes wise but it will be more work to figure it out on the fly rather than beforehand.

When filing separately each spouse will need to report their own income and deductions on their separate tax returns. This means that if one spouse has a higher income and is able to claim more deductions, it may make sense for them to file separately in order to reduce their overall tax burden.

However, there are some drawbacks to filing separately as well. For example, if one spouse itemizes their deductions, the other spouse must also itemize rather than take the standard deduction. Additionally, certain credits such as the earned income credit and education credits are not available when filing separately.

Allocating Credits and Deductions

You can maximize your tax savings by strategically allocating credits and deductions based on your individual financial situation.

When a married couple files taxes separately, each spouse must decide whether to take the standard deduction or itemize their deductions. If one spouse chooses to itemize, the other spouse must also itemize their deductions even if it results in a lower overall tax benefit.

Tax implications should also be considered when deciding how to allocate credits and deductions. For example, some credits may only be available if you file jointly, while others may be limited or completely unavailable when filing separately.

It's important to consult with a financial planner or tax professional to determine the best strategy for your unique situation and goals. Again, we cannot stress enough that we are not tax professionals and none of this should be construed to reflect your exact scenario or specific advice.

Benefits of Filing Taxes Jointly

We have always filed jointly so we're biased towards this choice.  If you're married, there's a good chance that filing taxes jointly could save you money and provide additional benefits.

The tax benefits of filing jointly include a higher standard deduction, as well as eligibility for several tax credits that are only available to married couples who file jointly. Financial advantages can also be found in the form of lower tax rates for certain income brackets.

Another perk of filing taxes jointly is the ability to combine your incomes and assets. This can be especially helpful if one spouse earns significantly more than the other, allowing them to take advantage of deductions and credits that may have otherwise been unavailable if they had filed separately. Additionally, joint filers may have access to more favorable capital gains rates on investments.

Filing taxes jointly can also simplify the process by reducing paperwork, since both spouses' information is included on one return. It can also help streamline financial planning by providing a clearer picture of overall household income, allowing for better budgeting decisions going forward.

Overall, while there are certain situations where it may make sense for a married couple to file separately (such as when one spouse has significant medical expenses), in most cases filing jointly offers significant financial benefits and simplifies the tax process.

Drawbacks of Filing Taxes Separately

One major disadvantage of filing separately is that it can result in a higher tax bill overall since some tax credits and deductions are limited or not available at all when filing separately. Additionally, the process of filing separately can be more complicated and time-consuming than filing jointly.

Higher Tax Bill

Opting to file taxes separately as a married couple may result in a higher overall tax bill. This is one of the possible disadvantages of this choice, along with other factors such as being ineligible for certain tax credits and deductions.

When filing separately, each spouse's income is taxed at a higher rate than if they were filing jointly. This can especially impact couples who have disparate incomes or high-earning individuals.

Limits on Certain Tax Credits

It's also important to note that filing taxes separately as a married couple can affect your eligibility for certain tax credits. Some tax credits have income thresholds that limit who can claim them. By choosing to file separately, you may not meet these income requirements and miss out on valuable tax benefits.

For example, the Earned Income Tax Credit (EITC) is a credit designed to help low-to-moderate-income families. However, the income threshold for claiming this credit is lower for those who file separately compared to those who file jointly.

This means that if you and your spouse choose to file separately and one of you earns too much money, you may lose out on this credit altogether. It's essential to carefully consider all aspects of your finances before deciding whether or not filing taxes separately is right for you.

Complicated Filing Process

Navigating the complex filing process can be overwhelming for individuals who are considering an alternative to filing jointly. Complications can arise when a couple has joint assets and liabilities, such as a mortgage or investment property.

It may be difficult to determine how to allocate deductions and credits between each spouse's tax return. In addition, there are tax implications of separate filing that must be carefully considered before making the decision to file separately.

For example, some tax benefits such as the Earned Income Tax Credit or the Child and Dependent Care Credit may not be available when filing separately. Furthermore, certain deductions such as student loan interest or IRA contributions may have lower limits for those choosing to file separately.

Making the Best Decision for Your Situation

So, how can you determine what's best for your situation when it comes to filing taxes separately as a married couple? There are several factors to consider before making this decision.

First and foremost, understanding the tax implications is crucial. Filing separately may result in higher taxes for both spouses, especially if they have high incomes or significant deductions.

It's important to compare the potential tax savings with the added cost of preparing separate returns. Another factor to consider is financial implications.

Filing separately can affect eligibility for certain tax credits and deductions, such as the Earned Income Tax Credit or student loan interest deduction. Additionally, filing separately may impact each spouse's ability to contribute to retirement accounts or receive Social Security benefits based on their partner's work history.

To make an informed decision about whether to file jointly or separately, it's essential to review each spouse's income and deductions carefully. This includes examining any joint assets and liabilities, such as property ownership and debt obligations.

Consulting with a qualified tax professional can help ensure that all options are explored thoroughly and we highly suggest you talk to a professional before making any big tax decisions.