Married couples, consider popping this question: Should we file taxes jointly or separately?
Elisabeth Buchwald, USA TODAY
Updated 5 min read
What could be more romantic than discussing taxes?
Tax season is officially behind us, but it's never too early to plan for next year, and a question you and your significant other may want to ask is: Should we file our taxes jointly or separately?
It's the age-old quandary couples face each year because of the benefits and drawbacks that come with each option. A simple coin toss to decide which route to take could end up being more costly or cause you to miss out on hefty tax credits and deductions, leading to a smaller tax refund.
For instance, the standard deduction for married couples filing jointly was $25,900 this year versus $12,950 for separate filers. For newlyweds who aren't yet homeowners this mattered a lot since it likely made more sense for them not to file an itemized return and take the standard deduction, said Tim Speiss, a certified public accountant and partner of EisnerAmper in New York.
But there are many more considerations to take into account before you make your final decision.
If you're married you can choose whether you want to file a joint return or file two individual returns.
Filing a joint tax return means your income and your spouse's income get combined together. The joint income is subject to different tax brackets than single filers.
The Internal Revenue Service raised the thresholds for taxes filed this year to adjust for inflation.
Marginal tax rates for married couples filing jointly were:
35% for incomes over $431,900
32% for incomes over $340,100
24% for incomes over $178,150
22% for incomes over $83,550
12% for incomes over $20,550
10% for incomes less than $20,550
Marginal tax rates for individual filers:
35% for incomes over $215,950
32% for incomes over $170,050
24% for incomes over $89,075
22% for incomes over $41,775
12% for incomes over $10,275
10% for incomes less than $10,275
Importantly, filing jointly means you're both on the hook for the money you and your spouse owe to the IRS prior to your marriage.
Congrats on tying the knot. Now figure out how you're filing your taxes.
In order to file a joint tax return in 2023, you had to have been legally married by Dec. 31, 2022. So as long as you got your marriage license in 2022, you were considered married in the eyes of the IRS.
But if you got divorced or legally separated from your spouse at any point during 2022, you're considered unmarried for the entirety of the year and cannot file a joint return.
Finally, to file jointly you and your spouse must both agree to it. That's why both signatures are required on the tax return.
Do you get more money if you file jointly?
"When you file jointly, that is typically how you get the largest legitimate refund," says Scott Curley, co-CEO of FinishLine Tax Solutions, a tax consulting firm based in Houston.
That's because there are more tax deductions and credits married couples filing jointly are eligible for. For example, the Earned Income Tax Credit is generally only available to married couples who file jointly. The EITC enables low-income households to deduct as much as $6,935 off their taxes if they have three or more children.
Similarly, the Adoption Credit and Child and Dependent Care Tax Credit are only available for married couples filing jointly. These credits can directly lower your tax bill and trigger bigger refunds.
Additionally, couples filing jointly are subject to significantly higher income thresholds for each making the maximum $6,000 deductible IRA contribution.
When should a married couple not file jointly?
If you had a lot of out-of-pocket medical expenses the previous year, it may make sense to file a separate return. That's because the tax code allows you to deduct out-of-pocket medical expenses that exceed 7.5% of your adjusted gross income. When you file jointly you have one adjusted gross income which that 7.5% rule applies to.
So if for instance, you had $15,000 of out-of-pocket medical expenses last year with an adjusted gross income of $70,000 you could deduct $9,480 ($70,000 x 7.5% = $5,250; $15,000 - $5,250 = $9,480). Whereas if you filed taxes jointly and your adjusted gross income was $200,000 you wouldn't be able to deduct any of your medical expenses since it wouldn't exceed 7.5% of it.
Another situation where it may not make sense to file a joint return is if one spouse has a significantly lower income, Speiss says. That's because the lower-income spouse may be eligible for more itemized deductions by filing individually..
Also if you don't owe any money to the IRS but your spouse does, by filing together your tax refund could be applied toward the tab they've racked up with the IRS.
"The system does not distinguish between parties if they file jointly," says Curley of FinishLine. But if you file separately you won't be liable for your spouse's tax burden.
Curley says "dozens" of his clients over the years ran into this issue because one spouse wasn't transparent with the other about how much money they owe the IRS.
He recommends bringing this up with your partner before you tie the knot.
