What it means
When a couple marries, the tax authority treats them as married for the whole tax year, and they must choose how to file. Married Filing Jointly is one of the two main choices, the other being Married Filing Separately.
Most couples choose the joint option because it tends to produce a lower combined tax bill. On a joint return, the couple adds together their wages, business profits, interest and other income.
They then subtract either the standard deduction, a fixed amount set for joint filers, or their itemised deductions (actual qualifying expenses such as mortgage interest). The result is taxable income, which is taxed using the joint brackets.
Joint brackets are generally wider than those for single filers, which often reduces the tax paid when one spouse earns much more than the other. When both spouses earn similar amounts, the benefit is smaller and in some cases couples face a marriage penalty, meaning they pay more together than they would as two single people.
Many tax credits and deductions are available or more generous on a joint return, including several education and family-related credits. Some income limits for credits and retirement account contributions are set at higher levels for joint filers, though the limits differ by rule and year.
The main catch is joint and several liability. Each spouse is legally responsible for the full amount owed, including any tax, interest and penalties arising from errors or omissions by the other spouse.
For this reason, couples with concerns about a spouse's reporting sometimes consider filing separately instead.
In practice
Real-world examples.
Example
A couple where one spouse runs a small bakery and the other works as a nurse file jointly. The bakery's profits and the nurse's wages are combined, and they claim a single standard deduction. Their accountant confirms that the joint result gives a lower tax bill than filing separately.
Example
A newly married couple in their first year together find that their combined income pushes them into a higher bracket than either would reach alone. They check whether a marriage penalty applies by comparing joint tax with the total of two single returns. The difference is small, so they stay with joint filing for simplicity.
Example
A couple with a young child file jointly to claim family-related credits. These credits would be reduced or unavailable if they filed separately. Their combined refund is larger than the total of two separate returns.
Formula
Calculation
Joint taxable income = Spouse 1 income + Spouse 2 income - Deduction
Suppose one spouse earns wages of $90,000 and the other earns $60,000, giving combined income of 90,000 + 60,000 = $150,000. Assume for illustration that the joint standard deduction is $30,000, a figure which is set by the tax authority and changes over time. Joint taxable income is then 150,000 - 30,000 = $120,000. That $120,000 is taxed using the joint brackets, whereas filing as two single people would have split the same income across two sets of narrower brackets.Case study
Seen in the real world.
Marlow and Priya Dalton are an illustrative, fictional couple. Marlow is a freelance photographer with irregular income of about $55,000 a year, and Priya is a software engineer earning $120,000. They are deciding how to file after their wedding.
Their accountant prepares both versions. Filing jointly produces a total tax bill of $27,300, while filing separately would produce $29,800. The joint route saves $2,500, mainly because Marlow's lower income fills the lower part of the joint brackets and several credits remain available.
In this illustrative case, the Daltons file jointly. They also agree that both will review the return together, because each is legally responsible for every figure on it.
Watch out
Common mistakes.
- Assuming that each spouse is only responsible for the tax on their own income, when joint filing makes both responsible for the full amount.
- Not comparing joint and separate filing in years with unusual circumstances, such as large medical costs or student loan plans.
- Assuming that joint filing always saves money, when some couples with similar high incomes pay a marriage penalty.
Questions
People also ask.
Who can file jointly?
Couples who are legally married by the last day of the tax year can generally file jointly, and in some situations a surviving spouse can also use the status.
Can we switch from joint to separate after filing?
Generally a couple can change from separate to joint after the deadline, but changing from joint to separate is not normally allowed once the joint return is filed.
What is a marriage penalty?
It is the extra tax a couple pays together compared with what they would pay as two single people, which can happen when both earn high incomes.
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