Marriage impacts on many aspects of life that you may not have considered before walking down the isle, such as filing tax returns. There is sometimes confusion as to whether married couples file tax returns as a single unit or whether they continue to file individual returns. The Internal Revenue Service (IRS) allows married couples to choose to file joint or separate returns.
Joint Filing Basics
Married couples that choose to file joint returns create a single tax that accounts for income, deductions and credits for both partners. According to the IRS, married couples may file joint returns even if one partner had no income or deductions. Both partners must sign the joint return and both are liable for the accuracy of the return.
Separate Filing Basics
Married couples that choose to file separate returns will continue to file returns as they did before they were married, except that they must choose the "Married Filing Separately" filing status instead of the "Single" status. Filing separate returns may be preferable for couples that keep their finances separate or wish to be responsible for the accuracy of their own returns. The IRS states that if you live apart from a spouse, such as in the case of separated married couples, you may be eligible to claim the "Head of Household" filing status which could save you money on taxes.
Joint Filing Advantages
Joint filers face different tax brackets than separate filers, which can affect the total amount of tax a couple pays. The tax brackets are set up so that joint filers tend to benefit greatly if one partner earns substantially more than the other. For instance, if one partner earns $20,000 and the other earns $80,000, the couple will face a maximum tax rate of 25 percent if they file jointly, while the spouse that earns $80,000 would enter the 28 percent tax bracket if the couple filed separate returns. According to TurboTax, electing to file separate returns rarely results in lower taxes.
If a couple consists of two income earners that earn roughly equivalent salaries, there may be little difference between filing jointly and separately in terms of the total amount of taxes owed. Couples should consider the impact of their filing status choice each year before filing a return. For instance, if you and your spouse normally file separate returns because you earn similar incomes but one of you lost a job or got a new job that pays substantially more, it might benefit you to start filing joint returns.
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