SHOULD MARRIED COUPLES FILE JOINTLY
March 10, 2021 - Douglas Myser
Should married couples file jointly. A choice is given to married couples at tax time, to file jointly or separately. Most married people automatically file joint returns because they can get a lower tax rate, but some situations exist where filing a joint return would in fact be better. Some of the reasons to file jointly, to get a lower tax rate. In most all cases, a married couple filing a joint return will get a lower tax rate filing a joint return. You can also earn more credits and deductions if you file a joint return. Couples who file separately lose the chance to claim the Earned Income Credit, or the American Opportunity Credit, and the Lifetime Learning Credit for education expenses. Married couples filing separately also cannot take the student loan interest deduction or the tuition and fees deduction. In most all cases you cannot claim the dependent care credit if you file separately, but if you're legally separated or living apart from your spouse, you may still be able to file separately and claim the credit. You child tax credit and capital loss deduction limit will be half the amount it would be on a joint return. Should married couples file jointly.
You can deduct retirement account contributions. Married couples filing jointly also have much higher income cutoffs to be eligible to make Roth IRS contributions. They can contribute to a Roth IRA as long as the modified adjusted gross income on their joint return is less than $208,000 in 2021, with contribution amount starting to phase out if they earn more than $198,000. But if you're married filing separately and lived with your spouse at any time during the year, you can only contribute to a Roth IRA if your income is less than $10,000. A reason to file separately would be if you earn the same income as your spouse. The way the tax bracket works, some high income couples may end up with lower taxes if they file separately. Sometimes you have to file both ways to determine which one works out best, then go with that option. Should married couples file jointly.
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