Have you ever wondered how your relationship status affects your taxes? There are misconceptions regarding both single filers and joint filers. Many people believe that single filers end up paying more and joint filers get more money back; however, this isn’t always the case. Depending on your unique tax situation, you may be surprised at how filing status is taken into consideration. Knowing the facts and benefits of the different ways to file your taxes can aid in how you go about them each year. Here’s how your relationship status impacts your taxes.
It’s believed that single filers always end up paying more in taxes, but this isn’t necessarily the case. There are tax breaks for single filers to help ease their tax burden. These include:
Deducting student loan interest
Contributing to a retirement plan
Receiving credit for books and tuition
Those who are low-income filers without dependents may also qualify for an Earned Income Tax Credit. If you’re unsure about whether or not you qualify for this, speak with a tax professional to see if you may be able to claim it. New tax laws are also in effect this year, and they impact single filers as well, with the standard deduction increasing from $6000 to $12,000.
Married filers have the option to file separately or jointly, so choosing what works for you is important. If it’s your first time filing jointly with your spouse, you may be surprised to find that your combined income has pushed you to a higher tax bracket. If this is the case for you, it’s important to keep this in mind, so that you can adjust your withholding accordingly. It’s recommended that joint filers start to plan for taxes and get organized as early as possible. After all, there can be a lot to get in order with two people filing together, so planning efficiently and having a filing system is a good idea. Tax professionals urge joint filers to get organized and stay organized all year-long. Don’t wait until the last minute to get all of your documents together. This can cause items to be forgotten and left out of your tax return.
Married couples can generally lower their tax liability by filing jointly, so it is recommended in most cases. Benefits of joint filing include:
Wider tax brackets
Lower tax rates
More credits & benefits available
If you’re unsure about whether or not you should file jointly, it may be a good idea to enlist the help of a trained professional to help you decide.
Depending on the status of your divorce, you may still be able to file a joint tax return. Those who are separated, but not divorced by the end of the tax year can choose to file a joint return, or there’s an option of married filing separately. When the divorce is finalized, the option to file a joint return is no longer in the picture. Whatever you relationship status is on December 31st will dictate how you’ll be able to file your taxes.
There may be many financial affairs that you need to handle when a spouse passes, and there are many ways to ease your tax burden when this happens. Widowed filers may opt to file their taxes as married filing jointly or qualifying widow(er). This helps to increase the chances of being able to take advantage of a lower tax rate and a higher standard deduction.
Getting the Most Out of Your Taxes
Tax season can cause anxiety for some and great joy for others, but no matter which end of the spectrum you are on, if there’s any uncertainty, consider asking for help. This is especially effective for newlyweds and first-time filers. It’s understandable that you may have questions and concerns…taxes can be complicated. With the ever-changing and evolving tax laws, hiring a professional can help ease your mind about how to go about your taxes properly. Get the most out of your hard work, be sure that you’re handling your taxes efficiently and correctly, and don’t be afraid to ask for a little help from the pros.
The tax experts at Bodine Perry are ready to help you this tax season! Call (855) 851-8318 or visit www.bodineperry.com to get started.