Tax Implications of Marriage on Your Filing Status

Your Guide to State, Local, Federal, Estate + International Taxation

Have you recently gotten married or plan on getting married sometime in the near future? Are you worried about the tax implications? There are a couple of choices that can be made on your upcoming tax returns that can either save or cost you money. Your current situation will be the determining factor in what works best for you. The question is: what should your filing status be? You have two options: married filing jointly or married filing separately. Both of these options have their pros and cons.

Advantages to filing joint:

  • Higher standard deduction
  • Higher tax credits
  • Eligible for certain credits (Adoption Expense Credit & Lifetime Learning Credit)
  • Tax rates and taxes owed may be less – generally
  • Cheaper to prepare one return instead of two separate returns
  • Better retirement planning

Disadvantages to filing joint:

  • Both liable for the tax due
  • Both responsible for the accuracy of the return
  • Deductions are limited by your AGI – worse depending on your situation, medical, and miscellaneous deductions
  • Refunds go to the financial obligations of either spouse
  • Confidentiality/privacy

Advantages to filing separate:

  • Separate ties (example: one spouse owns a business and the other spouse does not want to be connected to the business)
  • Different tax liabilities (one spouse may have a refund while one has a liability)

Disadvantages to filing separate:

  • Pay the highest marginal tax rate
  • No balancing of profits and losses
  • Both spouses must use the same system for claiming deductions (standard or itemized)

You can consult with a tax adviser regarding which filing status is most advantageous for you and your spouse.

By Kelsey Olsen