During tax time, there are a number of decisions that you can make that are going to influence how you are going to do your tax return, which deductions you are able to take in, and even how big your tax bill is going to be. One of the things that you should consider is the filing status that you would like to go with when you are ready to go with your tax return. Some people like to file married jointly and others like to go with married by filing separately. They both have their benefits and negatives, but most people choose to go with married filing jointly to save some time and even to reduce their tax bill.
There are some reasons why you would consider filing married by separate. While this does not work for everyone, it has some benefits depending on the way that you do your finances and if one of the couples work from home or runs their own business. If you are uncertain about which type of tax filing you should do, consider hiring a tax professional who will be able to help you pick the right filing status for your needs this tax season.
Protect Your Business
One of the most common reasons why people will consider filing separately when they are married is because they want to protect their businesses. This allows sole proprietorships and other partnerships to have a tax return that is just for their business without mixing in any personal information. This can make things a lot easier.
For example, if you are a freelancer from your home, you may want to consider filing separately, even if you are married. This allows you to put in the information that is just for your business. You can just put in the information for your income, deductions, losses and more without issues. Your spouse will then be able to file their own return that includes their personal income along with any of the deductions that the two of you agreed should go on the other return.
This may seem like more work to get everything put together in two different returns, but it does help out a lot when you are running a business. You will not have to mix up the two and it is easier for record keeping needs. This is not a method that everyone likes to go with though. You may need to talk to your tax professional to see what is going to work the best for your needs If you don’t run your own business, this is probably not the right filing status for you. But for those who run their own independent businesses who want to keep the two returns separate, this is the best one to choose for your tax return needs.
Protect With Separate Finances
If you and your spouse keep your finances separate, it may be a good idea to keep your tax returns separate as well. This will help to protect both of you. There could be one spouse who is misusing their money and not making the best financial choices. If you are both sharing the same tax return forms and the other spouse is found doing things that are illegal with their money, such as having a foreign bank account that is not reported, both of you are going to be in trouble.
But when you file separately, it does not matter what happens with the other partner. Separate tax returns means that one spouse can get in trouble with the law while the other one stays safe from the issue. This helps you to stay safe and keeps the issues targeted at the person who is solely responsible for the actions.
Things to Consider
There are a few things to consider. First, this filing status is usually going to make your tax bill a bit higher compared to married filing jointly. This makes it hard to pick this option because most people do not want to pay in more for taxes compared to the other filing status. So consider whether the extra tax bill is worth your time or not.
In addition, the two of you will need to decide who gets to claim which deductions. For example, which of you get to claim any children between the two of you because it is not possible for both to have these claims on their return. Your home mortgage interest and some other things cannot be taken for both couples, but this could cause some issues if not taken care of beforehand.
If you are considering going with this filing status, make sure to talk to your tax professional. This ensures that you are going with the right filing status and that you are not missing out on some other important factors that you need to consider. They can also answer all of your questions and get you the best results possible on your tax return.
When you are ready to start on your tax return, no matter which kind of filing status you would like to go with, it is important to get the right tax professional on your side. Make sure to contact our professionals today to get started on the right track to doing a great job on your tax return.
Joseph J. Gormley CPA