Jointly vs Individual
Marriage comes with a lot of responsibility, including financial responsibilities and so there is one thing newly married couples should know about and that is taxing. If you have been paying taxes individually, it’s time for you to explore a whole new option and that is Joint taxation. Read on to know what it’s about.
Usually, married couples have an option to file tax jointly or separately on their individual federal income tax. The IRS always encourages for most couples to file tax returns together by extending many tax breaks to those who file jointly. In many cases, it is best for the married couple to file together but there are a few scenarios where it’s better to have individual tax returns.
When you are filing a joint tax return with your husband or wife, you have many advantages. The IRS gives one of the largest standard deductions each year to the couple, allowing them to deduct significant amounts from their income instantly. Couples who file together usually end up getting two exemption amounts from their income and might also easily qualify for multiple tax credits such as Child and Dependent Care Tax Credit, Exclusion or credit for adoption costs, Earned Income tax credit and finally the lifetime learning education tax credit. Joint filers usually receive higher income thresholds for a few taxes and deductions. These benefits help the couple keep a lot of money to themselves.
On the other hand, couples who file taxes individually have very few tax considerations. The standard deduction for individuals is a lot lower than that offered for the joint filers. For example, in 2016, married filing had whooped a good $12,600 where individuals only had $6,300. However, there are situations when you should file separately to help you save your tax return. Like, if you or your spouse takes a large amount out of your own pocket for medical, you might only have 10% of your adjusted gross income. Whereas if individually, the 10% adjustment will be only from one of your incomes. There are temporary exemptions every now and then for visiting www.taxpreparerlasvegas.com but please feel free to check out the resources there.
The best possible way to know if you should file jointly or separately is to have your tax return prepared both ways. Double check the calculations and then look at the net refund or balance in each method. Taxing is hard and especially if you are new in it. Don’t be very worried if you don’t know what to do. You can consult a tax expert and ask him or her to help you with the correct choice or what exactly you should do. The most important thing here is to keep all your receipts and payments to yourself somewhere safe so that when it comes to paying the tax, things don’t get messy. As a business, you should have records of every financial transaction of your business and even outside. Therefore, remember to keep records, consult an expert, take some time to understand and then you will know which choice to make.