(US law & generally)
First Time Filing Jointly? Tax Information You Should Know
Congratulations! You’re married. Now you’ve combined homes, kids and in-laws. Should you combine your tax returns as well? Marriage can save you money on your taxes, or you could end up penalized by filing a joint return. Read on for the benefits of filing jointly for the first time.
Can You File Jointly?
You must have been married on the last day of the tax year to be married in the eyes of the IRS, whether you’re declaring that you’re married filing jointly or married filing separately. You have to wait for the end of the tax year in which you got hitched to file your first joint tax return.
Should You File Jointly?
If you want to file as married filing separately, the IRS does not allow you to claim certain deductions and credits. If you want to take deductions for student loan interest, tuition and fees, the earned income deduction or education tax credits, you are better off filing jointly. Also, even if you each file separate tax returns, you both have to make the same choice between the standard deduction and itemizing your deductions, regardless of which option works better for each spouse.
You could decide to file separately to keep any debts from before your marriage from affecting your new spouse. Any tax liens that have been imposed for unpaid child support, student loans or previous tax liability can be deducted from your tax refund. To keep tax liens from costing your spouse money, keep your returns separate until they’re paid off. If you still wish to file jointly, your spouse can file IRS form 8379, the Injured Spouse Allocation. This keeps the debt-free spouse from being penalized on their part of the return and allows you to take the deductions and credits available to joint filers. If you have any questions or concerns, it may be a good idea to contact an IRS lawyer that can help you determine the best way to file for your unique situation.
Issues for Stepparents
The question often comes up as to whether a stepparent can claim a stepchild as a dependent. If your spouse is legally able to claim her child as a dependent under her divorce settlement, you will also claim that child if you file jointly. The stepchild must be under age 19, under age 24 and a full-time student, or permanently and completely disabled. In addition, the child must have lived with you for more than 50 percent of the tax year and must have provided less than 50 percent of his or her own support. In addition, your spouse’s divorce agreement could give her the legal right to claim the child as a dependent regardless of whether the child resided with you for more than half the year.
Many factors go into the decision of whether or not to file jointly as a newly married couple. The biggest question may be, simply, which way saves you the most money. Depending on your incomes, filing jointly can make a lot of sense. On the other hand, the United States’ progressive tax rates can hit you with a huge “marriage penalty.” The best way to figure out the answer is to prepare your taxes both ways, jointly and separately, and file the version that gives you the lowest overall taxes.
Melanie Fleury is a married taxpayer that has filed both jointly and separately. She has found that hiring an IRS lawyer or tax service like Instant Tax Solutions is a great way to ensure that your taxes are being done properly and in the way that will benefit both you and your new spouse.