Married Filing Jointly Tax Deduction


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Married FILING JOINTLY vs. SEPARATELY in 2023 | Which Is Better?

In addition, joint filers are eligible to take a standard deduction that’s double that of a single taxpayer. However, since the IRS only allows a couple to file a joint tax return if the state they reside in recognizes the relationship as a legal marriage unmarried couples are never eligible to file joint returns.

Student Loan Interest Deduction

You might be eligible for the student loan interest deduction if you paid interest on student loans during the tax year. This deduction can be up to $2,500 for qualifying student loan interest paid.

The deduction starts phasing out at a 2022 modified adjusted gross income of $70,000 for single filers and $145,000 for married filing jointly filers. If your modified adjusted gross income exceeds $85,000 for single filers or $175,000 for married filing jointly filers, the deduction isn’t allowed at all.

Increased Standard Deduction For Certain Disaster Losses

If you have a net “qualified disaster loss,” you can claim a larger standard deduction. A qualified disaster loss is a casualty or theft loss of personal-use property that is attributable to:

  • A major disaster declared by the President in 2016
  • Hurricane Harvey
  • Hurricane Maria
  • California wildfires in 2017 and January 2018
  • A major disaster declared by the President between January 1, 2018, and February 18, 2020, if the loss occurred before January 19, 2020 or
  • A major disaster declared by the President before February 26, 2021, if the loss occurred between December 28, 2019, and December 27, 2020, and continued no later than January 26, 2021 .

You need to complete IRS Form 4684 to see if you have a net qualified disaster loss.

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When Do You Want To File Separately

Basically, our rule of thumb is this: File separately when it saves you money. Whichever filing status puts more money in your pocket , thats the filing status we recommend.

Its rare that filing separately will mean more money for you. But there are some circumstances in which this is the case, like these:

1. Your spouse isnt paying their taxes.

Your spouse may play catch me if you can with the IRS and not pay their taxes. We dont recommend this but, in that case, you should definitely file your taxes.

2. You dont know if your spouse is honestly reporting their income or deductions.

Remember: When you file jointly, youre both held responsible for the accuracy of your tax returns. If your spouse has intentionally reported false numbers, the IRS will see you as a partner in crime.

3. You or your spouse want to claim medical debt as a deduction.

If you or your spouse had medical bills last year, you may be able to deduct some of it. How much you can deduct depends on how much money you make.

Basically, the more income you make, the less you can deduct from your medical expenses. And sometimes you make so much you cant deduct anything. So if your spouse makes a lot more than you do and you file jointly, your medical deduction will be a lot less than if you file separately.

Figuring out which way works best can be mathematically intense. If youre not sure, take your case to a tax pro and let them do the math for you to be safe.

How The Standard Deduction Works

Takes the standard deduction for Married filing Jointly and then ...

Even if you have no other qualifying deductions or tax credits, the IRS lets you take the standard deduction on a no-questions-asked basis. The standard deduction reduces the amount of income you have to pay taxes on.

  • You can either take the standard deduction or itemize on your tax return you can’t do both. Itemized deductions are basically expenses allowed by the IRS that can decrease your taxable income.

  • Taking the standard deduction means you can’t deduct home mortgage interest or take the many other popular tax deductions medical expenses or charitable donations, for example.

  • If someone can claim you as a dependent, you get a smaller standard deduction.

  • For the 2022 tax year, you get to add an additional $1,400 to your standard deduction if you’re over 65 or blind if you’re also unmarried and not a surviving spouse, that jumps up to $1,750. For the 2023 tax year, these two additional standard deduction amounts will increase by $100 to $1,500 and $1,850, respectively.

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What’s The Maximum Amount I Can Claim As A Charitable Tax Deduction On My Taxes

When you donate cash to a public charity, you can generally deduct up to 60% of your adjusted gross income. Provided you’ve held them for more than a year, appreciated assets including long-term appreciated stocks and property are generally deductible at fair market value, up to 30% of your adjusted gross income. Combining more than one type of asset can be a tax-efficient move to maximize the amount that you can take as a charitable tax deduction.

Annual Increases Due To Inflation Adjustments

Each year, the IRS makes annual inflation adjustments to certain items. These can help reduce your taxes owed compared to a scenario where the IRS didn’t make inflation adjustments.

For instance, the IRS increased the standard deduction amounts from 2021 to 2022. The married filing jointly and qualifying widow standard deduction increased by $800. The standard deduction for married filing separately and single taxpayers increased by $400. For those filing as a head of household, the standard deduction increased by $600.

While tax rates generally remain the same, the tax brackets increase slightly each year due to inflation. The particular tax brackets differ depending on your filing status.

Also Check: Self Employment Tax Deductions 2021

Stimulus Impact On The Child Tax Credit For 2021

Child Tax Credit Changes

The American Rescue Plan raised the maximum Child Tax Credit in 2021 to $3,600 for qualifying children under the age of 6 and to $3,000 per child for qualifying children ages 6 through 17. In years other than 2021, the credit was worth up to $2,000 per eligible child, and 17 year-olds were not eligible for the credit.

The Child Tax Credit changes for 2021 have lower income limits than the original Child Tax Credit. Families that do not qualify for the credit using the revised income limits are still eligible for the $2,000 per-child credit using the original Child Tax Credit income and phase-out amounts.

In addition, the entire credit is fully refundable for 2021. This means that eligible families can get the entire credit, even if they owe no federal income tax.

New, Temporary Advance Child Tax Credit Payments

The Child Tax Credit for 2021 has been expanded by the American Rescue Plan Act. Part of this expansion is to advance the 2021 tax credit to families by sending them direct payments during 2021 rather than having them wait until they prepare their 2021 taxes in 2022.

For updates and more information, please visit our 2021 Child Tax Credit blog post.

TurboTax Tip: If you own a business, employing your child might enable you to take a business expense for the wages that you pay your child. The child’s income usually is taxed at a relatively low rate when the wages stay under the $12,950 standard deduction .

What Are The Advantages Of Married Filing Jointly

Tax Forms & Deductions : How to File Taxes if Married Filing Jointly

More likely than not, youre better off filing jointly. Here are a few reasons why:

1. You have a higher standard deduction.

If you file separately, you only get a $12,000 standard deduction. Filing jointly doubles that amount to $24,000. Yeah, thats right. We said $24,000! Most tax filers can substantially lower their taxable income with that.

2. You get more tax credits.

Tax credits are like gift cards from the IRSthey apply to your final tax bill and reduce it dollar-per-dollar. Call it a late wedding present , but the IRS gives more tax credits to married couples filing jointly than to couples filing separately.

If youre married filing jointly, then you may qualify for some of these tax credits:

  • Earned Income Tax Credit
  • Child and Dependent Care Tax Credit
  • Adoption Credit
  • American Opportunity Credit
  • Lifetime Opportunity Credit for Higher Education Expenses

Now, just to be clear: You can get these credits if your filing status is married filing jointly, single or head of household. But if youre married filing separately, you wont be eligible.

3. You can save time.

We cant overstate this. When you file jointly, you only have to fill out one tax returnnot two. So youre saving time. And if youre using a tax pro, filing separately could cost you more money.

4. Filing jointly is less complicated.

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When Should Married Couples File Taxes Separately

Filing separately also may be appropriate if one spouse suspects the other of tax evasion. In that case, the innocent spouse should file separately to avoid potential tax liability due to the behavior of the other spouse. This status can also be elected by one spouse if the other refuses to file a tax return at all.

The Tax Items For Tax Year 2021 Of Greatest Interest To Most Taxpayers Include The Following Dollar Amounts:

  • The standard deduction for married couples filing jointly for tax year 2021 rises to $25,100, up $300 from the prior year. For single taxpayers and married individuals filing separately, the standard deduction rises to $12,550 for 2021, up $150, and for heads of households, the standard deduction will be $18,800 for tax year 2021, up $150.
  • The personal exemption for tax year 2021 remains at 0, as it was for 2020 this elimination of the personal exemption was a provision in the Tax Cuts and Jobs Act.
  • For tax year 2021, the top tax rate remains 37% for individual single taxpayers with incomes greater than $523,600 . The other rates are:
  • 35%, for incomes over $209,425
  • 32% for incomes over $164,925
  • 24% for incomes over $86,375
  • 22% for incomes over $40,525
  • 12% for incomes over $9,950 .
  • The lowest rate is 10% for incomes of single individuals with incomes of $9,950 or less .
  • For 2021, as in 2020, 2019 and 2018, there is no limitation on itemized deductions, as that limitation was eliminated by the Tax Cuts and Jobs Act.
  • The Alternative Minimum Tax exemption amount for tax year 2021 is $73,600 and begins to phase out at $523,600 . The 2020 exemption amount was $72,900 and began to phase out at $518,400 .
  • For tax year 2021, the monthly limitation for the qualified transportation fringe benefit remains $270, as is the monthly limitation for qualified parking.
  • For tax year 2021, the foreign earned income exclusion is $108,700 up from $107,600 for tax year 2020.
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    Can I Take A Fair Market Value Deduction For Donating Private S

    Yes, it’s possible to deduct the full fair market value of the contribution if the recipient organization is a public charity. But tactically, the answer depends on whether the charity is able to accept private stock as a gift. Most charitable organizations simply dont have the resources, expertise or appetite to efficiently accept and liquidate these types of assets, particularly in a time crunch at the end of the year.

    However, Fidelity Charitable has a team of in-house specialists who work with donors and their advisors to facilitate charitable donations of S-corp and private C-corp stock every day . Once you make a donation to Fidelity Charitable and the asset is sold, youre able to recommend grants to your favorite charities, quickly and easily.

    And by donating private stock, you generally do not pay capital gains taxes on Fidelity Charitable’s subsequent sale of the stock. There’s a second tax benefit as well: you’ll generally be able to deduct the full FMV as determined by a qualified appraisal.

    What Is The Standard Deduction For Married Filing Jointly

    Married Filing Jointly? What You Should Know

    The standard deduction is $25,900. Thats up $1,900 from last year. If you and your spouse are both 65 or older, or if youre blind, you get an additional $1,300 deduction. So, your total deduction would be $27,200

    If you are a single filer, the standard deduction is $12,550. Thats up $550 from last year. If youre blind or 65 or older, you also get an additional $1,300 deduction. So your total deduction would be $13,850.

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    Nc Standard Deduction Or Nc Itemized Deductions

    You may deduct from federal adjusted gross income either the N.C. standard deduction or N.C. itemized deductions. In most cases, your state income tax will be less if you take the larger of your N.C. itemized deductions or your N.C. standard deduction. On Line 11 of Form D-400, enter either the N.C. standard deduction or N.C. itemized deductions, whichever is applicable. Make sure you fill in the correct circle to indicate which deduction you are claiming. Fill in one circle only.

    Important: DO NOT enter the amount of your federal standard deduction or your federal itemized deductions on Line 11. The N.C. standard deduction and the N.C. itemized deductions are not identical to the federal amounts and are subject to certain North Carolina limitations. In addition, there is no additional N.C. standard deduction amount for taxpayers who are age 65 or older or blind.

    Which Filing Status Works Best For You

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    The IRS doesn’t require that married couples file joint income tax returns simply because they’ve tied the knot. Spouses have the option of filing separate married returns or married filing jointly. Both statuses have their advantages and disadvantages. Learn a few tips to help you decide which option is best for you.

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    Other Ideas To Save On Your Taxes

    Families have other ways they may be able to save on their taxes. For instance, business owners could employ their children within their businesses. If you do, you may be able to take a business expense for the wages that you pay your child. Your child’s income may also receive a relatively low overall tax burden as long as the wages stay under the $12,950 standard deduction for 2022.

    If your children are in college, you may want to consider purchasing a second home in their college town. This may allow you to take advantage of the mortgage interest and real estate tax deductions for second homes on your tax return. You would have to itemize to take these deductions, and they may not provide much benefit depending on your situation. Make sure to run the numbers before doing so.

    Family life can be hectic. Don’t let your taxes add to your stress level. TurboTax can help you efficiently file your tax returns and ensure you claim all of the credits and deductions your family qualifies for so you can get every dollar you deserve.

    Let an expert do your taxes for you, start to finish with TurboTax Live Full Service. Or you can get your taxes done right, with experts by your side with TurboTax Live Assisted.File your own taxes with confidence using TurboTax. Just answer simple questions, and well guide you through filing your taxes with confidence.Whichever way you choose, get your maximum refund guaranteed.

    The Child Tax Credit For Tax Year 2022

    Get a Bigger REFUND with THIS DEDUCTION? | Tax Strategies for Married Couples

    The Tax Cuts and Jobs Act increased the child tax credit for tax year 2022 from the old $1,000 limit. The new child tax credit results in up to a $2,000 credit per qualifying child age 16 or younger. If you owe no tax, up to $1,500 of the new child tax credit may be refundable using the Additional Child Tax Credit for 2022.

    Children over age 16 aren’t eligible for the child tax credit. However, these older children and other qualifying dependents may be eligible for a new tax credit of up to $500 called the . Dependents must be a U.S. citizen, U.S. national or U.S. resident alien. They must also be a qualifying child or qualifying relative.

    A qualifying child must meet the relationship, age, residency, support and joint return tests. A qualifying relative must meet the “not a qualifying child, member of household or relationship” test, gross income test and support tests. TurboTax asks questions to determine whether a person is a qualifying child or relative when you complete your tax return.

    Both credits start phasing out, or being reduced, if your adjusted gross income exceeds $400,000 for married filing jointly filers or $200,000 for other filing statuses.

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    Irs: Here Are The New Income Tax Brackets For 2023

    • The IRS has released higher federal tax brackets for 2023 to adjust for inflation.
    • The standard deduction is increasing to $27,700 for married couples filing together and $13,850 for single taxpayers.
    • There are also changes to the alternative minimum tax, estate tax exemption, earned income tax credit and flexible spending account limits, among others.

    Amid soaring inflation, the IRS this week announced higher federal income tax brackets and standard deductions for 2023.

    The agency has boosted the income thresholds for each bracket, applying to tax year 2023 for returns filed in 2024.

    These brackets show how much you’ll owe for federal income taxes on each portion of your “taxable income,” calculated by subtracting the greater of the standard or itemized deductions from your adjusted gross income.

    When To Claim The Standard Deduction

    • Heres the bottom line: If your standard deduction is less than your itemized deductions, you probably should itemize and save money. If your standard deduction is more than your itemized deductions, it might be worth it to take the standard and save some time.

    • Try this quick check. Although using the standard deduction is easier than itemizing, if you have a mortgage or home equity loan its worth seeing if itemizing would save you money. Use the numbers you find on IRS Form 1098, the Mortgage Interest Statement . Compare your mortgage interest deduction amount to the standard deduction. Property taxes, state income taxes or sales taxes, and charitable donations can be deductible, too, if you itemize.

    • Run the numbers both ways. If youre using tax software, its probably worth the time to answer all the questions about itemized deductions that might apply to you. Why? The software can run your return both ways to see which method produces a lower tax bill. Even if you end up taking the standard deduction, at least youll know youre coming out ahead.

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