Tax filing status question

[disneysteve]

I have a friend who has been a single mom and files as head of household. She is getting married next month and is wondering how to file for '06. Does she have to file as married now? What are the advantages and disadvantages of filing jointly or individually? Any advice would be appreciated. This is an area I know little about.

[sweeps]

Typically a married couple should file jointly. If you don't you can miss out on some good tax deductions and favorable income levels (like Roth eligibility). However, occasionally it can be beneficial to file separately, for example if one spouse has very low income but really high medical bills -- that would allow much more of the medical bills to be claimed as a deduction.

[Elgin526]

I'm pretty sure that she will have to file either as married filing jointly with her husband (they turn in one return for the two of them) or they can file as married filing separately (they each do their own return and send in one for each of them). Usually filing jointly is the best way to go but it really depends on what their deductions are. I don't think she can continue to file as head of household unless her new husband doesn't work.

What I would do is have her buy Turbo Tax or other tax software, she can run it both ways (and it will also tell her the exact requirements for all the different filing statuses) and see what works out best for them. If they've also bought/sold real estate or bought/sold stocks or other investments or just plain have a complicated return this year, it may pay to have a professional do it for them this time around.

[disneysteve]

Originally Posted by Sweepsplayer

However, occasionally it can be beneficial to file separately, for example if one spouse has very low income but really high medical bills -- that would allow much more of the medical bills to be claimed as a deduction.

This is kind of what she was wondering about. She does use one of the computer programs. I'll tell her to just run the numbers both ways and see which works to her advantage.

[kristinecfp]

She can only file as Married Filing Jointly or Married Filing Separately (unless they separate - hopefully that won't be an issue yet!).

Both Sweeps and Disney are correct in that it is typically better to file MFJ. One point about MFS that hasn't been brought up yet - if one spouse elects to itemize their deductions, the other one MUST itemize as well. Since medical expenses came up several times in this thread, thought I better point that out. That could be a deal breaker if only one spouse has enough itemized deductions to beat the standard deduction.

[Diolla]

Originally Posted by kristinecfp

She can only file as Married Filing Jointly or Married Filing Separately (unless they separate - hopefully that won't be an issue yet!).

Plus alot of the deductions and credits are not available to Married filing seperately. Married filing Joint is almost always the best way to go.

[MonkeyMama]

Does she live in a community property state????

One thing that people do not realize is if you live in a community property state you end up haveing to split most, if not all of your income, between 2 returns if you file MFS.

Once in a blue moon we have clients coming in here hell bent on filing MFS. Once we explain everything that is involved, how they have to split income, and the fact the tax return will cost 10 times as much to prepare as a result (exaggerating a bit - but it is crazy the work involved with some of these very wealthy individuals) then they get the picture.

Regardless she will have to filed married of some sort - separate or joint, if she is married during the year.

If she is not in a community property state I do say she can run a comparison in turbo tax on which is better end the end. USually MFJ as stated, especially with the current Bush Tax Cuts. The marriage penalty is greatly removed until 2010. After then she will want to reevaluate - depending if the "marriage penalty" is reinstated. But even then MFJ is best 9.9 times out of 10.

The real reason to file MFS is if you are in the process of divorce or do not trust your spouse and do not want to be responsible for their taxes.

[vsjhoc]

Steve - I believe if she is married as of December 31, 2006. she is considered to be married for 2006 for filing purposes. Same thing with kids -- my brother was happy when his daughter was born in late December -- woo hoo, another dependent! (I think he was happy just to have a healthy little girl, also ...)

[MonkeyMama]

YEah those labor inductions on December 31 pay off - LOL.

[Lau]

I got married last year, and filed Married Filing Jointly for 2005. My husband and I lived together prior and he would file as Head of the Household when we were just considered significant others. Come to find out you can't file as Married Filing Separately and Head of the Household at the same time...

I agree with most here that filing as Married Filing Jointly is the best way to go

[tabbycat31]

The only reason where MFS is the best way to go is if one spouse has IRS debt (delinquent child support, student loans, past taxes) that would result in a wage garnishment.

Other than that, it's best to file jointly.

[cicy33]

if you file married filing seperately you cannot get the earned income tax credit even if you qualify for it. you have to file jointly to get that one. but you can still get the child tax credit which is different.