Married joint filing helps you combine your income with your spouse, and share your deductions. It seems like the smartest way to file when you’re married, but considering that you have the option of filing separately; it’s a good idea to weigh the pros and cons.
First Things, First
Before we get into the positive and negative aspects of joint filing for income tax, you need to figure out whether you even qualify. You need to have been married on any day before or on the last day of the year, to file jointly for the year. This is called being considered “legally married”.
You’re considered legally married for the entire year, so you’re eligible to file a joint return this year even if your spouse died during the year.
You also need to make sure that your spouse wants to file married filing joing (MFJ), because both signatures are required when you file your tax return.
Joint Tax Returns Defined
In a joint return, you report all your credits, deductions, and income in a single tax return form. There a few important things to remember about joint filing:
- Each of you is equally responsible for the accuracy of the information on the return.
- Both of you are will be held individually and personally responsible if you don’t pay the tax.
- Each of you will have to present documents to prove the accuracy of the return.
The Problems
The IRS, in the “Married Filing Jointly” section of Publication 501, says “Both of you may be held responsible, jointly and individually, for the tax and any interest or penalty due on your joint return. This means that if one spouse does not pay the tax due, the other may have to. Or, if one spouse does not report the correct tax, both spouses may be responsible for any additional taxes assessed by the IRS. One spouse may be held responsible for all the tax due even if all the income was earned by the other spouse.”
This could be a problem, if one of you isn’t as responsible with finances as the other, or if you both don’t take joint ownership over managing your combined income and spending. It could result in one of you having to pay the other’s taxes to prevent the IRS from levying penalties on the both of you.
If you find that the tax on your joint return is close to the tax that you would pay if you filed separately, it’s better to file separately and at least maintain individual responsibility for each of your returns.
The Perks
Joint filing gives married couples a host of deductions and credits that you just don’t get when you file separately. The standard tax deduction that a married couple can claim by joint filing for 2014 is $12,400! That’s a pretty sweet deal.
Check out this table if you want the tax rates for married joint filing for 2014:
|
Income From |
Income Up To |
Tax Rate |
Long Term Gains |
|
0 |
$18,150 |
10% |
0% |
|
$18,150 |
$73,800 |
15% |
0% |
|
$73,800 |
$148,850 |
25% |
15% |
|
$148,850 |
$226,850 |
28% |
15% |
|
$226,850 |
$405,100 |
33% |
15% |
|
$405,100 |
$457,600 |
35% |
15% |
|
$457,600 |
– |
39.6% |
20% |
Filing separately means you don’t have access to the deduction and credit perks that come with joint filing, but it also means relief from joint liability. So figure out which works best for you, as a couple, and make your choice.
If you’re still unsure, don’t worry! You can always visit your local ATC Tax Office and sit down with one of our Tax Pros.
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