Single vs. Married Filing Status: A Guide for Newlyweds

Congratulations! Getting married is an exciting time in your life. It’s also a major life event that can affect your taxes in some significant ways. 

Married couples have the option to file jointly or separately on their federal income tax returns. Whether you’re married filing jointly or married filing separately, your filing status determines important factors, such as your tax rates and standard deduction. If you’re filing jointly, you’re affected by your spouse’s income and deductions. If you’re filing separately, you generally cannot take certain tax credits like the child and dependent care credit. 

Having the right filing status can help you save money come tax season. If you recently got married or are planning to get married this year, here are some of the most important things you should know before filing taxes. 

Club Capital is the largest accounting and advisory firm for insurance agency owners in the country providing a one-stop financial infrastructure including monthly accounting, integrated payroll, CFO services, and tax preparation.  

What Are The Filing Status Options For A Married Couple? 

If you are living with your spouse, there are two ways to file your taxes:

1. Married, filing jointly (MFJ): To file jointly means you file a single return, which will include the income and deductions for both spouses.
   
   
2. Married, filing separately (MFS): Each person files their own return, keeping incomes and deductions separate.

As long as you get married on December 31 of last year, or earlier, you are eligible to file your taxes jointly. 

What Are The Advantages Of Married Filing Jointly?

Married filing jointly typically provides married couples with the most tax breaks. For the  2022 tax year, the standard deduction if you file separately is only $12,950, but if filing jointly the standard deduction is doubled to $25,900. Keep in mind that the standard deductions are adjusted every year. For the 2022 tax year, the standard deduction for married couples filing jointly rose to $25,900, an increase of $800 from 2021. Married couples filing separately will only see a $400 increase in the standard deduction for 2022.

Another advantage of filing jointly, is that you may qualify for tax credits you wouldn’t be eligible for if you’re married and filing separately. 

Some tax credits for married couples filing jointly include: 

• Earned Income Tax Credit 
• Child and Dependent Care Tax Credit 
• Adoption Credit 
• Credit for the Elderly and Disabled 
• American Opportunity Credit 
• Lifetime Opportunity Credit for Higher Education Expenses 

Lastly, filing jointly can be less complicated, less time consuming, and more cost effective since you only have to fill out one tax return.

Are There Advantages For Married Couples Filing Separately?

In most situations it’s almost always advised that married couples file jointly because of the lower overall tax responsibility. However, there may be some circumstances where filing separately is recommended. 

Some situations where filing separately could be beneficial include:

• If you or your spouse has high or unpaid student loan debt.
• If you or your spouse want to claim medical debt as a deduction.
• If you think you’re going to separate from your spouse. 

For the past 5 years, Club Capital has helped insurance agents better manage their agency's finances through best-in-class monthly accounting and tax services. Schedule a demo today!

Our experts at Club Capital are available to assist existing clients with any tax related questions, email us at tax@club.capital for more information