Author Topic: First year married... file jointly or seperately?  (Read 9246 times)

Honest Abe

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First year married... file jointly or seperately?
« on: January 01, 2013, 05:38:15 AM »
Both my wife and I make similar incomes... I was playing around with an iOS app called "TaxCaster" that is put out by Intuit... when I toggled the "Filing jointly/seperately" button the taxes paid it seems to lower our return when I file jointly. Now this app is a blunt tool and I don't trust it 100%... Is there any way to figure out in advance what the best course of action is to take? I plan on doing my own taxes this year with Turbotax

Blackbomber

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Re: First year married... file jointly or seperately?
« Reply #1 on: January 01, 2013, 08:02:24 AM »
TurboTax will probably give you the same option (TaxAct does). If you and your wife earn similar incomes, filing jointly will definitely be in your interest. From my understanding, filing separately would only work if each of you are in a separate tax bracket individually.

BlueMR2

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Re: First year married... file jointly or seperately?
« Reply #2 on: January 01, 2013, 10:43:58 AM »
From my understanding, filing separately would only work if each of you are in a separate tax bracket individually.

And also it's not a given then either.  We're better off filing jointly despite a large difference in income (I make just over 3x what she does).  I had assumed that would not be true, but the numbers came back this way.

mlipps

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Re: First year married... file jointly or seperately?
« Reply #3 on: January 01, 2013, 10:56:49 AM »
There's also certain deductions you can't get if you file separately. Specifically, I know you can't deduct student loan interest.

TLV

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Re: First year married... file jointly or seperately?
« Reply #4 on: January 02, 2013, 12:54:10 PM »
If you and your wife earn similar incomes, filing jointly will definitely be in your interest. From my understanding, filing separately would only work if each of you are in a separate tax bracket individually.

Quote
We're better off filing jointly despite a large difference in income (I make just over 3x what she does).  I had assumed that would not be true, but the numbers came back this way.

Filing jointly is definitely better for large differences in income. Take the extreme - one spouse earns all the income, the other is a stay-at-home parent. If you file jointly, it's like each person only earned half of the amount, so it will be taxed at a lower rate compared to a single person making the whole amount.

From what I understand, filing separately is only better in rare cases involving special deductions (such as medical expenses), where the eligibility for the deduction is dependent on total income.

nawhite

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Re: First year married... file jointly or seperately?
« Reply #5 on: January 03, 2013, 11:13:04 AM »
There are a couple cases where if you both make similar incomes, filing separately is the better case (but beware certain restrictions like how you can't deduct student loan interest if you file separately)

If you look at the tax brackets:
Tax Bracket   Married Filing         Jointly   Single
10% Bracket   $0 $17,400         $0 $8,700
15% Bracket   $17,400 $70,700   $8,700 $35,350
25% Bracket   $70,700 $142,700   $35,350 $85,650
28% Bracket   $142,700 $217,450   $85,650 $178,650
33% Bracket   $217,450 $388,350   $178,650 $388,350
35% Bracket   Over $388,350   Over $388,350

if you both make 75k each, then if you file singly, you both stay in the 25% bracket, but jointly you would bump up to the 28% bracket for a small portion of your income. In this case filing separately would save you a little bit of money.

But as you can see, that only applies if you both make between 71k and 85k or both between 109k and 178k. In just about all other circumstances, filing Jointly is a better deal.

TLV

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Re: First year married... file jointly or seperately?
« Reply #6 on: January 03, 2013, 11:36:10 AM »
There are a couple cases where if you both make similar incomes, filing separately is the better case (but beware certain restrictions like how you can't deduct student loan interest if you file separately)

If you look at the tax brackets:
Tax Bracket   Married Filing         Jointly   Single
10% Bracket   $0 $17,400         $0 $8,700
15% Bracket   $17,400 $70,700   $8,700 $35,350
25% Bracket   $70,700 $142,700   $35,350 $85,650
28% Bracket   $142,700 $217,450   $85,650 $178,650
33% Bracket   $217,450 $388,350   $178,650 $388,350
35% Bracket   Over $388,350   Over $388,350

if you both make 75k each, then if you file singly, you both stay in the 25% bracket, but jointly you would bump up to the 28% bracket for a small portion of your income. In this case filing separately would save you a little bit of money.

But as you can see, that only applies if you both make between 71k and 85k or both between 109k and 178k. In just about all other circumstances, filing Jointly is a better deal.

According to this website among others, that only works if you're not married yet and are deciding whether to get married or stay single. If you're married and you choose to file separately, the brackets have lower boundaries (exacly half the joint brackets) than if you're single.