Are you newly married?
Or maybe you’ve been married for a few years, but you noticed that your taxes have been sky high?
Then it may be time to change your tax filing status.
Married Filing Jointly (MFJ)
This filing status means you and your spouse file one return together, with combined incomes and deductions.
- More tax breaks in the form of:
- Higher standard deductions
- Lower tax rates (i.e. in 2020 MFJ couples are only taxed 10% on their first $19,750 whereas MFS couples are taxed 10% up to $9,875) To see which tax bracket you and your spouse fall into, click here.
- You may be eligible for more tax credits like:
- The Earned Income Tax Credit
- American Opportunity and Lifetime Learning Education Tax Credit
- Child and Dependent Care Tax Credit
- Reimbursement or refund for adoption expenses
Check with your tax preparer to see if you’re eligible.
- You may be subject to the “Marriage Penalty,” meaning you end up in a higher tax bracket before single people do. To see which tax bracket you and your spouse fall into, click here.
Married Filing Separately (MFS)
This filing status means you each file your own return with separate incomes and deductions.
- If you are on an income-based student loan repayment plan, the calculation is based on only your income, not your spouses; therefore filing separately prevents your spouse’s income from being included in your repayment calculation.
- If you’re going to divorce, filing separately ensures that you are each responsible for your own taxes and/or penalties.
- If you or your spouse have high medical bills, you can deduct these expenses if they are equal to or above a certain percentage of your income. If you file separately, your medical expenses will have to exceed a smaller amount than if you filed jointly.
If none of these situations apply to you though, it is likely best to file jointly. If you’re still not sure which filing status is best for you, ask your tax preparer to ensure you choose the most tax-saving option. Let us know if you’d like us to prepare your 2020 taxes!
How To Change Your Tax Filing Status
You can change your filing status when you submit your new tax return. But if you’d like to adjust your withholding per paycheck, you must submit a new W-4 form to your employer. And conveniently, you don’t have to wait until tax time to do it! If you want to know how to correctly submit form W-4, click here.