NEW YORK (MainStreet) —So you’re a newlywed doing your taxes together for the first time. Congratulations!
And sympathies. There’s nothing less romantic than filling out a tax return, and irritations over money are among the most common sore points for couples. So in addition to the advice from a recent panel of experts, here are a few thoughts to make the process, if not smooth, a bit less bumpy. (If you got married this year, or will, read on for tips on making the 2013 return easier.)
For most married couples, the first issue is whether to file a joint return or one for married folks who file separately. But before this, you must be sure you are married in the eyes of the federal government -- you must be a man and a woman, and have been married and living together on Dec. 31, of the tax year – 2012 in this case. If so, you are considered to have been married for the whole year.
Most married couples can save money by filing a joint return rather than separate ones. That’s because the Married Filing Separately return doesn’t provide for a number of tax benefits available in the joint return, including things like deductions for tuition fees and student loan interest payments, the child and dependent care credit and the earned income credit.Among the other drawbacks of separate returns, according to TurboTax, the tax software firm, are lower income limits that make it harder to deduct IRA contributions. Also, if you file separately, both of you must either claim the standard deduction or itemize – you can’t each do it differently.
So why would anyone file separately?
In a small percentage of cases when there is a large difference between the spouses’ incomes, separate returns can result in a lower combined tax liability. This mainly affects people living in states that don’t view all property as the couple’s community property. Community property states are Arizona, California, Idaho, Louisiana, New Mexico, Nevada, Texas, Washington and Wisconsin.