Today, I met with a client and her husband to work on setting up Quickbooks. Since they have a business together, but also do freelance work, I needed to figure out whether it was necessary to set up a separate Quickbooks file for each. That got me thinking about how married couples should file their taxes.
Taxes more than love will keep us together, or not. For income taxes, should you file married jointly or married separately? With most things in life, it depends. The objective is that you want to get the biggest tax benefit, so you have to evaluate which method is best. You will have to look how much income each of you made during the year, who incurred the most deductible expenses and maybe what state you live in.
Usually married filing jointly can yield a tax savings, particularly where the spouses have different income levels. If you have children it is almost always better to file jointly since you take full advantage of adoption expense credits and dependent child credits.
Filing separately may be good if you a lot medical expenses and itemized deductions. If you are doing taxes yourself, I suggest running the numbers through TurboTax both ways to see which one is best. Keep in mind the business deductions on your schedule C as well.
Reminder: 54 Days to April 15.