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Should I File Jointly with My Spouse?

Should I File Jointly with My Spouse? Fitzwilliams Financial

Although many couples may stand to benefit from filing their taxes jointly, doing so may not always be the most suitable choice. Therefore, it is essential to consider the following things when filing taxes as a married couple:

  1. See if you are eligible to file jointly: Being married by December 31st of the relevant tax year is a prerequisite for joint filing. For instance, if you are planning to file jointly for 2022, you must have been married by December 31st, 2022. However, if you get married on or after January 1st, 2023, you will not be able to file jointly for the 2022 tax year. [1]/sup>
  2. Determine your deductions and credits: Couples who are married and file for taxes separately cannot make use of several deductions that may lower their tax bill or result in higher refunds. For instance, filing separately disqualifies you from claiming deductions such as student loan interest, tuition and fees, education credits, and earned income credits. [2]
  3. Consider what you will be itemizing: If you are filing separately and one partner decides to itemize their tax return, then both partners are required to itemize. [3] Typically, itemizing is only advantageous if you can deduct more than the standard deduction. Therefore, unless both partners can benefit from separate itemization, filing separately may not be the best choice. However, if one partner has substantial deductions (such as a significant medical bill that exceeds the standard deduction) and they are in a low tax bracket, it may be more beneficial to file separately.[4]

  4. Consider your income options: If there is a significant difference in the income earned by married partners, filing a joint tax return can be beneficial. For instance, if one spouse earns $8,000 annually and the other earns $55,000 annually, filing a joint tax return would result in paying only 12% of their total income as taxes. However, if they filed separately, the spouse earning $55,000 would have to pay 22%. [5]

    Married tax brackets are typically calculated based on values that are roughly two times higher than single tax bracket values. This means that an unmarried individual earning $44,726 annually is subject to the same tax rate as a married couple earning $89,541.[6] However, since most households do not have equal incomes from both partners, joint filing can sometimes result in a lower overall tax bracket if there is a disparity in income.

Although tax law and advice can be complicated, there are professionals available to assist you in deciding the most suitable choices for your circumstances. If you require financial direction, contact us for a free evaluation of your financial situation.

When consumer confidence hits a multi-decade low, it is completely natural for you to feel a sense of hesitation about your hard-earned savings. If you are approaching retirement, seeing prices rise while trying to figure out the right time to adjust your portfolio can feel incredibly stressful. However, this low confidence might actually be introducing a healthy dose of critical thinking into the market right now. Instead of rushing into investments out of a fear of missing out, I am seeing people take their time to analyze their moves before they act.

This deliberate pace could be a vital asset as we prepare for what might be a historic three trillion dollar wave of tech IPOs. The names hitting the market are incredibly popular, and the media hype may make you feel like you need to change your entire strategy to get a piece of the action. But we must look closely at the underlying reality: many of these massive firms are not yet profitable. The typical corporate fundamentals simply are not there yet.

Because of this, I believe you should treat these speculative assets with extreme caution, much like money you would take to Vegas. If you want to participate, you might consider limiting that exposure to no more than five percent of a well-diversified portfolio. You should never dismantle a carefully crafted, long-term retirement plan just to follow a market trend. Furthermore, you must realize that extreme trading volumes during these public launches could cause your orders to execute at vastly different prices than you originally intended. It pays to be patient and let the dust settle.

If you have questions about how these shifting market dynamics might apply to your personal retirement plan, our team is always here to help.

Key Takeaways

  • A drop in consumer confidence may encourage a healthier investment environment by forcing individuals to rely on critical thinking instead of emotion.
  • An upcoming wave of massive technology IPOs might generate significant media hype, but these companies may lack current profitability and traditional business fundamentals.
  • Investors should avoid allocating more than five percent of a diversified portfolio to highly speculative, unproven market assets.
  • Heavy trading volume during a major public offering could cause investment orders to execute differently than an investor expects.

Fitzwilliams Wealth Management, Inc. is an SEC registered investment adviser. FWM and Fitzwilliams Financial are affiliated companies. This content is for informational purposes only and should not be construed as personalized investment advice. We do not provide tax or legal advice. Investing involves risk. Media appearances are for informational purposes only and do not constitute an endorsement.
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