Marriage comes with its own tax benefits, ones that help reduce liabilities and more. The advantages to filing jointly vastly outweigh those of married but filing separate. Those who file separate are treated as if they were single, wiping out any potential edge that they'd receive filing jointly.
An Overview of Joint Filing Status Benefits
Deductions are larger simply by being a married household of two, helping reduce the overall tax liability. The status also puts the couple in a lower tax bracket, thus reducing any taxes owed or enlarging the refund. If children are involved, a couple can lay claim to a plethora of child-related credits. It is now possible for a household earning less than $48,279 in a year to claim the Earned Income Credit which can also enlarge the refund. And in years where a general credit is offered, such as Making Work Pay, can be claimed at its maximum amount even though one spouse may have hardly worked or not at all. The bigger the difference in income can also be advantageous to obtaining credits.
Benefiting Even When A Spouse is an Independent Contractor
Households with one major bread earner benefit the most from the married filing joint status. It is still beneficial even when one partner works independent contracting jobs to bring in extra cash. The spouse that is working jobs with an independent contractor status can keep their tax liability at a minimum while still being able to bring in a decent amount of income. A single or filing separate contractor stays in the 10% tax bracket up to $8,375 for the year. Compare that to $16,750 for filing joint. In the situation where $15,000 is earned for the year, the tax liability will be all of $1500. The next bracket goes up to $68,000 in earnings but only moves into a 15% taxation rate. It's important to understand this information as the stay at home workforce increases.
Hiring a Tax Attorney
Each couple's tax situation is different. No two are exactly alike. The more complicated your household income, the better you'll be by hiring a lawyer that specializes in tax issues. An experienced professional will understand how credits work, how they can be applied to your situation and how to get you the maximum deductions. It's best to utilize a live person who knows how the IRS works as opposed to a tax program that doesn't always ask all of the right questions.
