I hope you survived the back to school traffic this week; it’s been crazy! Last week we spoke about how to talk to your kids about money. Now, it’s time to get back to basics when it comes to your money. Let’s talk taxes.
If you’re married or about to get married, especially if you’re a small business owner, now is the time to think about whether you should file your taxes jointly or separately. Here are some things to consider:
- Immediate Deduction – If you want to deduct a large amount of money, the best way is to file jointly. The IRS lets joint filers benefit from one of the largest standard deductions in existence, more than $12,600.
- Extra Credit – Couples who file jointly also qualify for tax credits worth thousands of dollars. One of these is the Earned Income Tax Credit or EITC, which allows couples and their children, who have Social Security numbers, receive a credit up to $6,242 to offset the cost of Social Security deductions. You can also apply for the American Opportunity Tax Credit for qualified education expenses. Talk to your bookkeeper or accountant to make sure you are taking advantage of these savings.
- Dependent Care – If you have little ones or aging parents and you file jointly, you can benefit from Child and Dependent Care Tax Credit. You can also get a credit if you’ve adopted a child. The Federal Government gives you a break if you have to hire a care provider for a spouse who’s disabled or a dependent child under 13; if it’s necessary for you to hire that person in order to go to work or look for a job. There are a number of parameters, so make sure you ask your accountant if you qualify.
- Filing Separately – As an accountant, who happens to have a bookkeeping business, I don’t recommend married couples file separately because they’ll only receive a deduction of $6,300 compared to double that for those filing jointly. The only time I encourage it is if you have a lot of medical expenses. This gets a little complicated, so e-mail me if you have specific questions.
I tell people who really are struggling with whether to file jointly or separately, to talk to their accountant or bookkeeper. Some accountants even work out the numbers both ways to see which is most beneficial to their client. At Brigade Bookkeeping, we can help keep your personal and business finances in order. So give us a call and we can help you figure out what to do, after you say, “I do!”