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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 people think about retirement planning, they often focus on one question: How much money will I need?

I believe another question can be just as important: What will that money be able to buy?

Inflation can gradually change the cost of groceries, housing, healthcare, transportation, travel, and many of the other expenses people may encounter throughout retirement. As those costs change, the purchasing power of a dollar may change with them.

That is why retirement planning can involve more than building an account balance or reaching a particular savings target. A comprehensive financial plan may also need to consider future

spending, retirement income needs, time horizon, inflation, investment strategy, and how someone’s financial circumstances could evolve over time.

In this Financial Forecast discussion, I explore how inflation can affect everyday expenses and why purchasing power may matter when evaluating a long-term retirement strategy. I also discuss why investors may benefit from looking at their financial decisions within the broader context of their goals rather than focusing on any one economic factor in isolation.

No one can know exactly what prices, markets, or economic conditions will look like years from now. Planning can instead involve evaluating different possibilities and building a strategy that may be able to adapt as circumstances change.

Watch the video to learn more about how inflation and changing expenses can fit into the retirement planning conversation.

Fitzwilliams Wealth Management, Inc. is an SEC registered investment advisor. FWM and Fitzwilliams Financial are affiliated companies. The content in this video is for informational purposes only and is not personalized investment advice or a solicitation to buy or sell any security. We do not provide tax or legal advice. Media appearances are for informational purposes only and do not constitute an endorsement. Investing involves risk.
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