How To Choose The Filing Status

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Introduction
Married couples have the option to file jointly
or separately on their federal income tax
returns. The IRS strongly encourages most couples
to file joint tax returns by extending several
tax breaks to those who file together. In the
vast majority of cases, its best for married
couples to file jointly, but there may be a few
instances when its better to submit separate
returns. Lets see what you need to know about
married filing jointly vs separately.
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Benefits Of Changing Your Status
Filing jointly typically provides married couples
with the most tax breaks. Tax brackets for 2020
show that married couples filing jointly are only
taxed 10 on their first 19,750 of taxable
income, compared to those who file separately who
only receive this 10 rate on taxable income up
to 9,875. also, the IRS offers spouses who file
jointly one of the biggest standard deductions
each year.
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Advantages of filing jointly
There are many advantages to filing a joint tax
return with your spouse. The IRS gives joint
filers one of the largest standard deductions
each year, allowing them to deduct a significant
amount of their income immediately. Joint filers
mostly receive higher income thresholds for
certain taxes and deductions- this means they can
earn a larger amount of income and potentially
qualify for certain tax breaks.
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Advantage Of Filing Separately?
When deciding on married filing jointly vs
separately, there are very specific situations
when it pays to submit separate returns. For
instance, you or your spouse have high or unpaid
student loan debt. If you have defaulted on your
student loans, meaning you havent paid on them
in 270 days or more, you must consider filing
separately. Thats because, in this, your joint
tax refund could end up being rerouted through
the Treasury Offset Program and put forward the
unpaid debt, meaning neither of you would get a
refund.
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Deciding which status to use
The best way to find out if you should file
jointly or separately with your spouse is to
prepare the tax return both ways. Double check
your calculations and then look at the net refund
or balance due from each method. If you use the
best service provider to prepare your return, you
can have the experts do the calculation for you,
and recommend the filing status that gives you
the biggest tax savings.
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