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I would like to know if it's more beneficial to file as

Hello, I would like...

Hello, I would like to know if it's more beneficial to file as married jointly or married separately since I am employed and my husband is self employed.

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I earned just under 100,000 this year as an employed person and my husband earned $45000 as a self employed person. I just want to know what would be most the most beneficial filing status for our circumstances. We have no assets, investments or anything and I've paid a substantial amount in student loan interest.

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Customer reply replied 7 months ago
we live in california
Answered in 5 minutes by:
1/15/2018
Chad EA, CDFA®, CFP®
Chad EA, CDFA®, CFP®, CERTIFIED FINANCIAL PLANNER ®, Professional
Category: Finance
Satisfied Customers: 2,762
Experience: IRS Licensed Enrolled Agent, CDFA ® CFP ®, MBA
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Welcome to JustAnswer!

My name is***** will assist you today.

You’re almost always better off married filing jointly (MFJ). Many tax benefits aren’t available if you file separate returns. Ex: You can’t claim a majority of the credits if you file separately. Also, if you file jointly, your standard deduction (if you don’t itemize) will be higher. This usually causes your taxable income and tax to be lower.

Another example: You can’t take the education credits (the American opportunity credit and lifetime learning credit), or the deduction for student loan interest.

___

The best way to figure out whether married filing jointly or married filing separately will benefit you the most is to prepare your returns both ways. This step does only take a tax professional a few extra minutes. Then, choose the filing status with the lowest net balance due or refund.

For a complete list of the “special rules” when filing MFS, see page 22 of Publication 17 https://www.irs.gov/pub/irs-pdf/p17.pdf

1. Your tax rate generally is higher than on a joint return.

2. Your exemption amount for figuring the alternative minimum tax is half that allowed on a joint return.

3. Your tax rate generally is higher than on a joint return. 2. Your exemption amount for figuring the alternative minimum tax is half that allowed on a joint return.

4. You can’t take the earned income credit. 5. You can’t take the exclusion or credit for adoption expenses in most cases.

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Customer reply replied 7 months ago
We keep all of our finances separate. My concern is that I should be getting a substantial amount of money back in taxes. But If my husband owes around 15,000-20,000 in taxes and I'm typically due back $7,000 to $8,000...I won't get anything back myself.

I completely understand and for that reason you may want to file separately

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Additionally, if you file jointly you are jointly and severally responsible for any tax payment due.

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If you file separately, you are not liable for his tax obligations.

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If he is self employed you would need to know his expenses, income and if he paid any quarterly taxes that are generally required.

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Customer reply replied 7 months ago
to clarify...in a typical situation where a married couple shares expenses and income in a situation where one is employed and the other self-employed, it's most beneficial to file jointly.In my situation, where we are married with me being employed and him being self employed and all of our expenses and income are completely separate and I want my tax refund back...it would be most beneficial to file separately?
Customer reply replied 7 months ago
he did not pay quarterly taxes
Customer reply replied 7 months ago
Is this summary correct?

Yes, a married couple who share expenses and income will generally receive a more favorable tax return if they file as married filing jointly as opposed to married filing separately.

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In your specific situation, not sharing income and expenses along with the possible under payment of tax liability by your spouse it may be more beneficial to you to file separately.

This will ensure you receive your tax refund separately then your husbands potential return or liability.

Chad EA, CDFA®, CFP®
Chad EA, CDFA®, CFP®, CERTIFIED FINANCIAL PLANNER ®, Professional
Category: Finance
Satisfied Customers: 2,762
Experience: IRS Licensed Enrolled Agent, CDFA ® CFP ®, MBA
Verified
Chad EA, CDFA®, CFP® and 87 other Finance Specialists are ready to help you
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I would agree with your summary.

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Customer reply replied 7 months ago
Great...thank you very much for the clarification.

Thank you for the rating.

Please do let me know if you have additional questions.

Have a good evening.

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