How to file taxes as newlyweds

You’ve said “I do” to the love of your life, and now, for better or worse, you have to file your taxes as married for the first time! Yet, deciding how to file taxes as a married couple can be tricky — as it is the first time you do anything new. 

The first step is figuring out which filing status to use when you do your taxes together for the first time. Your options are: Married filing jointly or married filing separately.

Each filing status affects your taxable income, so it’s important to get your filing status right. Selecting the right status impacts your tax rates, eligibility for specific tax benefits, and deductions. 

If you’re married, take a look at both options to see which status best matches your current situation and financial goals. 

Weighing the benefits and drawbacks 

Let’s cut to the chase: Is it better to file jointly or separately? When it comes to filing your tax return as a married couple, you’re almost always better off married filing jointly as many tax benefits aren’t available if you file separate returns. 

This is primarily because some of the most common tax credits and deductions are unavailable on separate returns, like the: 

• Earned Income Tax Credit (EITC) (for most filers) 

• Child and Dependent Care Credit (for most filers) 

• Student loan interest deduction 

• Adoption Credit (for most filers) 

• Lifetime Learning Credit or American Opportunity Credit 

• Credit for the elderly or disabled

• Exclusion of interest on Series EE or I U.S. Savings Bonds used for higher education expenses 

• The deduction for losses from rental real estate passive activities with active participation is limited or not available. 

• If you were married and lived apart the entire year, you can deduct up to $12,500 of losses on a separate return. 

• If you file jointly the maximum loss deduction is $25,000. 

What’s more, filing separately impacts the couple’s choice to take the standard vs. itemized deduction. When filing separately, both spouses need to take deductions in the same way. One spouse can’t itemize deductions while the other takes the standard deduction. And vice versa. 

In addition, the Child Tax Credit is usually reduced because the thresholds are lower for MFS. 

If you received Social Security or railroad retirement benefits and lived with your spouse at any time in the year, more of your benefits could be taxable with a separate tax return. 

How to decide

The best way to determine whether married filing jointly vs. married filing separately will benefit you the most is to prepare your returns both ways. Then, choose the filing status with the lowest net balance due or refund. After you choose the appropriate filing status for your situation, know that your tax rates (tax bracket) could differ based on filing status. 

What is the marriage tax penalty and does it apply to me? 

Let’s clear the air about the marriage tax penalty for couples filing as married filing separately. In reality, there’s no tax penalty for this tax status. What people thought of as the marriage tax penalty was just a quirk of the tax brackets before 2018. 

Prior to 2018, all but the two lowest brackets for many double-income married couples would owe more tax when filing as married filing jointly than they would have owed if they were filing as single. That’s because the married filing jointly tax rate brackets weren’t exactly double the single filer brackets. So, if each spouse had about the same income, they paid more total tax. 

The Tax Cuts and Jobs Act of 2018 largely ended this so-called marriage tax penalty by making most of the married filing jointly tax brackets exactly twice the size of the single filer tax brackets. In addition, the married filing separately tax brackets were changed to mirror single-filer brackets. 

Considerations to review

You may discover many questions you haven’t considered about your newlywed status and taxes. Discuss these questions before you have an awkward conversation with your spouse in front of your tax professional—who knows, you may find the answer could result in some tax breaks.

• “Did you sell or buy a home recently?” 

• “Are you on the mortgage jointly or only one of you?” 

• “Do you have unpaid tax debts or student loan defaults?” 

• “Do you have gambling wins or losses?” 

• “Do you have any capital gains or losses?” 

Filing paperwork 

When filing taxes as a married couple, prepare for more paperwork than you’re used to. Ensure all your documents are on hand early in the tax season to give you enough time to file. These documents include — W-2s, 1099s, and other documents that report your income or potential tax credits or deductions. 

Then, establish a filing system for all your important financial and tax documents. And make sure you both know where that information is kept. 

After you’ve filed, take some time as a couple to evaluate where the process was a bit rocky. Then, you may want to think about what to change for future tax returns. For example, if your tax refund was larger than expected, you may consider adjusting your tax withholding to keep more money in your wallet. 

Talk with your spouse about decisions that can affect your tax liability for next year. Will  you have a baby? Finish your college degree? Pay off debt? Start investing? Support  charities? Move or buy a house? These are all helpful questions to ask. 

— H&R Block