In this case, filing separately achieves the goal of maintaining separate responsibility for the accuracy of the returns and the payment of tax but without any additional liability. Here are some situations in which filing separately may be advantageous: Filing separate generates the same tax. Each spouse is only responsible for the accuracy of their separate tax return and the payment of any separate tax liability. However, there are some cases in which to consider married filing separetly.įiling a separate married return provides relief from joint liability.
The standard deduction for separate filers is far lower($12,400 in 2020) than that offered to joint filers. Separate tax returns may give you a higher tax with a higher tax rate. For example, you can file a 2020 joint return in April 2021 as long as you were legally married by December 31st, 2020.Ĭouples who file separately receive few tax considerations and are subject to a few consequences. They can earn a more substantial amount of income and potentially qualify for certain tax breaks.Ĭouples are eligible to file a joint return as long as they are married by December 31st, the last day of the tax year. Joint filers receive higher income thresholds for various taxes and deductions. The IRS gives joint filers the most substantial standard deductions each year($24,800 in 2020), allowing them to deduct a significant amount of their income off the top. There are many advantages to filing a joint tax return with your spouse.
For newlyweds, especially, there is a lot to consider-most importantly, deciding whether to report your income together or separate.Ī newly married couple has two choices for their filing status: Filing your income tax return with the IRS can be quite the hassle. So, let’s go back to the love and compatibility scenario. So this exemption can usually protect the deceased’s estate from taxation until the surviving spouse dies. Under federal tax laws, you can leave any amount of money to a spouse without generating estate tax. Marriage can protect the estate.īeing married can help a wealthy person protect the assets they leave behind. But, combine that with the income of a spouse who is making money, now those deductions may be available, and the loss could be a potential write-off. Alone they may not be able to take advantage of some deductions. Let’s say one spouse is losing money in a business. If the taxpaying spouses have substantially different salaries, the lower one can pull the higher one down into a lower bracket, reducing their overall taxes. Still, some of these tax breaks might have made tying the knot seem a little more appealing. Hopefully, the majority of these couples married for true love and compatibility. Did you know 2.3 million couples wed every year in the U.S.? Consulting an accountant during significant life changes can prevent common mistakes and set you up for success with your finances in marriage. When you experience a life-changing event, your cash flow and tax bracket are probably the last things on your mind. New life developments can be exciting, but they also change every aspect of your finances. That’s why talking to your accountant should be part of your wedding planning. Well, some of them they do, some of them they don’t advertise.