Filing Taxes for the First Time as a Married Couple: Should you File Jointly or Separately?
Matt and I tackled our first “big” task together as a married couple: filing taxes. We merged and managed finances together prior to marriage, but of course, filing taxes together was new.
Married couples have the option to file jointly or separately. Friends, family, coworkers, and articles online said that filing jointly will give us more in our return.
We decided to prepare our tax return both ways to see which would give us the most money back. We did receive more by filing jointly. I’m (clearly) not a CPA or finance expert, so I didn’t really understand why there was such a difference in the amount we would receive by filing jointly vs. separately. So, I thought I’d do some research to better understand it.
2016 Marital Status
It doesn’t matter when in 2016 you were married. If you were married before December 31, 2016, at 11:59 p.m., you and your spouse are considered married for the entire 2016 year.
Filing Jointly
When filing under the married-joint status, you and your spouse file one return together. Filing jointly combines your incomes, which may bump one or both of you into a higher tax bracket. Tax brackets determine the highest rate of tax applied to your income and are different for each filing status. You usually receive a higher income threshold for certain taxes and deductions by filing jointly since you receive a larger income, and may qualify for certain tax breaks.
Also, when you file jointly, you can claim two personal exemptions (one for each of you) instead of the one exemption allowed when you file as a single individual. The standard deduction allowed on the tax return is highest for married couples filing a joint return.
Filing Separately
If you file separately, you and your spouse’s incomes are separated and the deduction you receive is the same as filing single. You and your spouse are both responsible for paying the taxes, interests, and penalties due on the return. Your tax rate is also higher and you can’t claim certain deductions, such as education benefits, earned income credit (EIC), and others.
There are instances in which filing separately is the better option, though. One example is if you or your spouse owes student loans. The repayment plan relies largely on your income to determine your minimum monthly payment. If your spouse also earns money, filing jointly will increase your reported income, in which your required student loan payment may increase.
Deciding Which Status to Use
Married couples generally receive more in their return by filing jointly. But, as mentioned above, to see which will give you the most return, prepare your taxes both ways. You may want to meet with an accountant to ensure taxes are filed correctly and your return is accurate.
