The following post is a chapter in the TaxAssurances’ book, “Top 12 Tax Deductions You Might Have Missed. Tax Tips For People Who Do Their Own Federal Taxes.”
Chapter 7 Marriage
Not only is a marriage a union based on love and trust it also offers tax benefits. For instance, married couples that file their taxes together have higher standard deductions and exemptions than individuals that file single, head of household or married filing separately. As a result, married couples most likely have lower tax bills.
There are couples however that decide to file their tax returns separately. While they do have it as a option, here’s how the IRS describes what they are giving up:
• “If you choose married filing separately as your filing status, the following special rules apply. Because of these special rules, you usually pay more tax on a separate return than if you use another filing status you qualify for.
• Your tax rate generally is higher than on a joint return.
• Your exemption amount for figuring the alternative minimum tax is half that allowed on a joint return.
• You cannot take the credit for child and dependent care expenses in most cases, and the amount you can exclude from income under an employer’s dependent care assistance program is limited to $2,500 (instead of $5,000). However, if you are legally separated or living apart from your spouse, you may be able to file a separate return and still take the credit. For more information about these expenses, the credit, and the exclusion, see chapter 32.
• You cannot take the earned income credit.
• You cannot take the exclusion or credit for adoption expenses in most cases.
• You cannot take the education credits (the American opportunity credit and lifetime learning credit) or the deduction for student loan interest.
• You cannot exclude any interest income from qualified U.S. savings bonds you used for higher education expenses.
• If you lived with your spouse at any time during the tax year:
• You cannot claim the credit for the elderly or the disabled, and
• You must include in income a greater percentage (up to 85%) of any social security or equivalent railroad retirement benefits you received.
• The following credits and deductions are reduced at income levels half those for a joint return:
• The child tax credit,
• The retirement savings contributions credit,
• The deduction for personal exemptions, and
• Itemized deductions.
• Your capital loss deduction limit is $1,500 (instead of $3,000 on a joint return).
• If your spouse itemizes deductions, you cannot claim the standard deduction. If you can claim the standard deduction, your basic standard deduction is half the amount allowed on a joint return.
So as the list above suggests, if you’re married or getting married, file your tax return together. There are some real tax benefits.
For more information about being married and filing tax returns, read “Filing Status” on the IRS.gov website.
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