For Newlyweds, Arguments For and Against Filing Taxes Jointly
NEW YORK -- ( MainStreet) -- So you got married in 2011? That's great, but the Internal Revenue Service doesn't have all year for you and your spouse to decide how you'll file your taxes.
There is one basic truth for newlyweds during tax season: Whatever your marital status was Dec. 31 is what the IRS considers you for all of 2011. From there it gets a bit more complicated.
|Joint tax filing is usually the best way to go, but medical bills and "risky spouses" can get in the way.|
A married couple's first kiss after taking their vows essentially kisses both of their "single" tax filing statuses goodbye. From here on in, they're left with two options: married filing jointly and married filing separately. The former generally results in the lightest tax hit by giving couples a few breaks, including a credit for child- and dependent-care expenses, deductions for student loan interest and a lifetime learning credit. This wasn't always the case, but George W. Bush's tax cuts in 2001 and the Tax Relief Act in 2010 helped expand the lower tax brackets for joint filers and make it a bit easier on big earners and their low-earning spouses.
"Historically, two singles cohabiting would pay less than a married couple, but that was changed with the Marriage Penalty Relief Act," says David B. White, certified public accountant and president and founder of David B. White Financial in Bloomfield Hills, Mich. "Generally speaking, married filing jointly is going to be lower than married filing separately, especially if there's an imbalance of earnings where you would forfeit expenses and deductions for the person who doesn't have much income."
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV