TAX Question

posted 5 days ago in The Lounge
Post # 2
Member
613 posts
Busy bee
  • Wedding: February 2020

Are you in the US? Do you two work for yourself (I’m thinking no if you say you have paychecks)?

I can’t speak personally on everything (as I have a lot to learn myself) but I feel as though for the most part, you never really owe exorbitant amounts unless you have your own business or freelance or own property (and often this is handled through your mortgage/escrow). But other Bees will have better knowledge on that.

All this pertains to if you live in the US. I have no clue how other tax systems work!

Post # 4
Member
315 posts
Helper bee

Following. I’ve been trying to figure out how we should file as well. 

Post # 5
Member
1679 posts
Bumble bee

Do you have a CPA? I recommend getting one because they’ll know how best to file your taxes.

Post # 6
Member
55 posts
Worker bee
  • Wedding: September 2019

If you file together, there are some tax credits that can be passed from your husband to you and vice vera. Your accountant would decide which is more befinicial for you. Your accountant will ask if you want to file together or not but they should be able to advise you which one is best according to your situatioin.

Also, if you file together and let’s say your husband owes but you get a refund, they will usually use your refund to cover what your husband owes. If you file seperately, and your husband owes and you get a refund, then your refund is not applied to what your husband owes.

This is coming from an accountant student in Canada so take it with a grain of salt but that’s what I think the main differences are.

Post # 7
Member
6027 posts
Bee Keeper

futremrswhite17 :  if you don’t itemize then you’ll very likely pay less tax (percentage wise) this year than you did last year. The new tax law doubled the standard deduction (although it eliminated the personal exemption so it’s not that much of an improvement).

But once you have kids and own property it’s very likely going to increase, particularly if you live in a state with high state and/or property taxes. The new limits on SALT deductions are a squeeze on the middle class. 

ETA: run the numbers both ways and then file based on whichever method has you paying the least tax as a couple. Most of the time that’s going to be a joint return, but if you have some special circumstances there are reasons to file separately. 

Post # 8
Member
9745 posts
Buzzing Beekeeper
  • Wedding: September 2013

Married filing jointly is better for most people I believe.  Obviously an accountant would have to get into it for each scenario.  But if your situation is really straightforward with just some W2s then just go into turbotax or something similar and run both scenarios.  See which one is better.

Post # 9
Member
91 posts
Worker bee

If you are in US, MFS and MFJ deductions after the Tax Cuts and Jobs Act are essentially the same. A MFS taxpayer may deduct the greater of itemized deductions or the standard deduction ($12,000). MFJ taxpayers may deduct the greater of itemized deductions or the standard deduction ($24,000). If you two file MFS you both must either itemize or take the standard deductions. If you and your spouse’s itemized deductions are less than the standard deductions, you will essentially recieve no benefit from filing separately, as the standard deduction for filing separately is exactly half of the standard deduction for filing joint. 

Post # 10
Member
86 posts
Worker bee

I’m not an accountant yet, but close. The tax brackets for married filing jointly are a lot more favorable. For instance, if you are a single person if you make under $82,500 then you will be in the 22% tax bracket. However, if you are married, you can make $165,000 and still be in the 22% tax bracket. You can make more money and pay less in taxes. It sounds like your taxes are pretty simple though. Just run the numbers both ways and pick the one that looks better. Chances are though, MFJ is going to be the way to go. I will also say that the standard deduction for married couples was increased to $24,000 this year as opposed to the standard deduction of $12,000 last year. So even if you are making more money, the higher deduction should really help you. 

Post # 11
Member
2468 posts
Buzzing bee
  • Wedding: March 2006

Get a CPA to do them. Ours figures it both ways and files however is most beneficial. 

Post # 12
Member
95 posts
Worker bee

Congrats on the good income this year! Unsolicited advice – get some IRAs, 401(k)s, etc. 🙂  The earlier you start saving for retirement, the better off you’ll be.

Filing jointly is probably equivalent to or better than filing singly, but do run some calculations or talk with someone who can. It can depend on a variety of things (like capital gains).

Post # 13
Member
155 posts
Blushing bee
  • Wedding: October 2019

futremrswhite17 :  I think you can run the numbers for free in TurboTax and see which one is more beneficial 🙂

Post # 14
Member
91 posts
Worker bee

meien :  False. MFS and Single tax payers with income between 38,701 and 82,500 will both fall under the 22% tax rate. MFJ taxpayers with income between 77,401 and 165,000 will also fall into the 22% bracket. However, these are JOINT income figures, so if a married taxpayer earns 165,000 individually, and his/her spouse also earns income, the couple will effectively move into the next highest tax bracket (or if both earn 82,500, there will be no net tax effect). Tax laws typically don’t allow for blatant loopholes such as filing separate vs. filing jointly. There may be small discrepancies in unique situations that inflate or deflate tax liability, but for the most part there won’t be any significant benefit to MFS vs. MFJ.

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