The Pros and Cons of Filing Taxes Jointly as a Married Couple
Along with choosing the color of the drapes, the type of furniture you want in the living room, the car you wish to buy, and whether to get a dog or not, you and your spouse have another important decision to make and that involves your taxes. The IRS is quite particular about your filing status. If you got married on or before December 31, 2021, the IRS wants you to file your taxes either jointly as a married couple or separately but married. You can no longer file your taxes as a single applicant even if you got married on the last day of the previous calendar year.
Now, the decision might seem straightforward at first but there are considerable pros and cons to filing your taxes as a married couple. Some couples choose to file together while others prefer keeping their finances separate for logical reasons. Explore the benefits and drawbacks of filing your taxes together here and make an informed decision. Your filing status ultimately decides the tax benefits you are likely to get this tax year and during the time ahead.
Pros of filing taxes together with your spouse
First up, the standard deduction is exactly double – $25,100 for married couples filing jointly in place of $12,550 for single applicants. This simplifies the turmoil few taxpayers have when it comes to choosing between standard deductions and itemized deductions. You can now go for the higher standard deduction along with your spouse to reduce your gross taxable income and pay less in taxes. This can help both you and your spouse to save some valuable dollars.
Second, some tax credits are only applicable for married couples filing jointly. Tax credits help to decrease your net tax payable on a dollar-to-dollar basis and enable you to claim a refund if the credits exceed your tax payable. By filing jointly with your spouse, you can file for a greater number of tax credits as compared to filing separately.
And third, some popular tax credits have inflated values just because you are filing jointly. For example, you can claim a Child and Dependent Care Tax Credit of up to $8,000 along with your spouse for 2 or more children. The Earned Income Tax Credit also stands at around $6,728 for joint married tax filers. In all, both you and your spouse pay less in taxes if you file jointly.
The cons of filing taxes with your spouse
One, the overall income increases for joint filers which makes you two ineligible for a few tax credits and deductions. This is where you must evaluate all the tax benefits you get by filing jointly and separately and test which option gets you the greatest refund or credit. Stick to that approach until you make a life-changing decision that affects your taxes as well.
Two, in case your spouse and you are still financially dependent on someone and that person claims you or your spouse as a dependent in his/her tax return, you two cannot file your returns jointly. The IRS states clearly that the dependent can only file his/her taxes separately.
Lastly, one partner may end up bearing the liability of the other while filing taxes together. Your spouse may have to pay less in taxes than you if he/she chose to file separately but clubbing both the returns together distribute this liability equally on the both of you. Some couples are not comfortable with such an arrangement.
It is majorly a personal decision
Before filing your taxes, sit down and talk with your spouse about filing jointly or separately. Logically analyze the benefits and drawbacks of both options. Whatever route you take, make sure that it is a joint decision and should equally help both of you to save some money.
And if you manage to get a tax refund because of your increased deductibles or tax credits, both of you deserve to split the refund money equally. And what better way to do that than buying a quality used car in Easley for your family.
At Family Auto of Easley, you get affordable used family sedans and SUVs. Only a part of your tax refund money should be enough to cover your down payment as our flexible financing offer allows you to pay as low as $500 as down. Additionally, you get easy bad credit financing with the best interest rates and an exceptional trade-in deal that helps to bring down your overall tax burden.
So, make the best use of your tax refund money as a couple by buying a buy here pay here used car in Easley as a couple. The vehicle will stay with you as an asset, helping your family along the way.
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