You’re married and it’s time to do your taxes. Do you file separately or file jointly with your spouse? Is it better to do everything together, or is tax time a good time to go your own way? While it can vary from couple to couple, on average couples who file jointly tend to save more money. They also get to take advantage of certain tax benefits that aren’t available to single folks.
We know all about the benefits of filing jointly at Hacker Accounting. Wondering if doing your taxes with your spouse is right for you? Read on as we break down four hidden benefits of filing jointly with your spouse.
Couples who file together get to deduct two exemption amounts from their incomes. They also get to qualify for several tax credits, which include:
- The Earned Income Tax Credit
- Child and Dependent Care Tax Credit
- American Opportunity and Lifetime Learning Education Tax Credits
- Exclusion or credit for adoption expenses
They also get the benefit of having higher income thresholds for certain taxes and deductions. What this means is that spouses can earn a larger amount of income and STILL qualify for certain tax breaks.
Charity Really Pays Off
There’s a limit to the number of charitable contributions that can be deducted in a tax year, based on your income. One of the upsides of filing jointly is that it can raise that limit! And if you make large contributions but do not have an income that’s at least double that amount, the excess charitable contributions are carried and deducted the following year. You could end up saving a surprising amount of money on your taxes this way.
In times of financial stress and emergency your spouse can become a tax shelter. The negative numbers of one person in a marriage can end up helping both spouses! The spouse who’s losing money may not be able to take advantage of some deductions, but the spouse who’s doing well can use their partner’s losses as a tax write-off.
Depending on the income disparity between the couple, joint filers could get a marriage bonus for their taxes! If one spouse earns all of the couple’s income or has an income that vastly exceeds the other, not only will the couple not incur a marriage tax penalty but they could qualify for a tax bonus! One of the perks of the bonus is that it will shift the higher earner’s income into a lower tax bracket.
Got questions about filing jointly with your spouse? Give Hacker Accounting a call at 602-375-5254.