Filing Jointly for the First Time

If you are reading this, then it is highly likely that you were married since the last tax season concluded. First off, congratulations!

Now on to business. Since you are just starting out fresh in your new marriage, you are probably experiencing a lot of new exciting things, but still have to deal with the hassles that come with this major life event. Some of these troubles probably include name and address changes, financial account migrations and the dreaded filing of your annual income taxes.

Unlike your previous filing experiences, this one is different. Facing the IRS as a couple shouldn’t be a daunting task, but for many newly married couples, it can be a little frightening.

You may be asking yourself, “Should we file jointly or separately?” The answer is it depends.

Should Couples File Taxes Separately or Jointly?

Since there is no requirement to file jointly, you have a choice as to how you file. There are advantages and disadvantages to both choices. The best way to determine how you should file is to calculate the tax filing status that helps you pay the least in taxes. Combining household income has advantages, but if the joint income pushes your incomes into a higher tax bracket, then it may be in your best interest to file separately.

Make sure to consider:

• Employment Status – how your employment and deductions impact your income should be noted. If your deductions do not reduce your combined household income below your individual tax liability, then filing separately may be the best choice.
• Capital Gains from Stocks or Real Estate – this additional income will need to be accounted for, and your tax liability could be affected.
• Prize Winnings – any lottery, gambling, game show or monetary raffle winnings should be counted towards income.
• Child Support/Alimony and Back Taxes – if you or your spouse have outstanding debts, then filing separately could be a smart move.

The big takeaway here is to make sure that you have accounted for all your spouse’s income in addition to your own before filing. Any miscalculation could cause you to pay more than necessary.

Benefits to Filing Jointly

Filing jointly has many benefits, and if your combined deduction reduces your overall tax burden, then this is probably the best way to file.

Here are a few benefits to filing jointly:

• Lower Tax Rate
• Standard Deductions can be Higher
• Students can Claim Tax Credits for Education and Deduct Loan Interest
• Children can be Claimed as Dependents
• Possibly Meeting Deductions for Medical Expenses

Can You Include Business Tax Filing on Your Personal Taxes?

If your business is listed as a Sole Proprietorship or Single Member LLC, then as far as your marriage is concerned, filing taxes for your small business should be no different unless your spouse has a stake in the company.

According to the IRS, a spouse that has a controlling interest in the business will be taxed as the business owner, while their spouse who acts as an employee(limited authority) will be subject to income tax and FICA withholding.

If both spouses have equal rights to the business, then a partnership is recognized and the business will file with Form 1065, US Return of Partnership Income.

If you have classified your business as a separate legal entity, such as an LLC, General Partnership or LLP, then you will have to file the business separately.

Support is Available for Accounting Services in Raleigh

If you own a small business and need support filing your taxes after a major life event, then our team of experienced accountants in Raleigh are here to help. For nearly 30 years, our firm has provided extensive small business support to many area businesses and know the ins and outs of the tax law.

Contact our team to review your small business taxes by calling 919-420-0092 or completing the online contact form.