DULLES, Va. (1/12/16)--The clock is ticking for tax season. If you’re married, the tax breaks generally are in your favor when you file jointly. But, if you haven’t filed your return yet, consider these scenarios where it might make sense to file separately (AOL News Jan. 4).
If the self-employed spouse hasn’t been keeping up the quarterly payments or underestimated how much was needed to be set aside, that can add to joint tax liability or eat into a refund.
Splitting your taxes might be a better move. It might disqualify you from claiming certain credits or deductions, but it could minimize the amount of tax you'll owe overall.
Conversely, if you file returns separately, only the student’s income will be taken into account to determine what kind of payments that person qualifies for.
As in the self-employment scenario, you sacrifice certain other tax benefits when you file individually, but under certain circumstances--such as not claiming children and taking the standard deduction--you might pay less in taxes, overall, than if you file jointly.
There are other scenarios to keep in mind when planning your tax strategy as well, including divorce or uncertainty about liability for your spouse’s tax debt. Everyone’s tax circumstances are different. Work with an independent professional tax adviser or a tax specialist at your credit union before making tax-related decisions. Run the numbers to get an idea of how much you stand to gain or lose either way.
For more information, read “Financial Candor Vital in Second Marriages” in the Home & Family Finance Resource Center.