Married Filing Jointly: Understanding Tax Benefits & Requirements

Married filing jointly for tax purposes refers to the filing status in the U.S. for a married couple that is married as of the end of a tax year. Married couples can access distinct tax treatment that can be beneficial when filing under married filing jointly status.

Married couples can record each of their respective incomes, benefits, deductions, credits, and exemptions on a single tax return. Married filing jointly is highly beneficial if one spouse earns significantly more income than the other, because they may be able to utilize their spouse’s tax benefitsTax ShelterA tax shelter is a financial vehicle that an individual can use to help them lower their tax obligation and, thus, keep more of their money. It is a legal way for individuals to “stash” their money and avoid getting it taxed., deductions, credits, or exemptions to reduce their tax payable.

However, if both spouses earn a significant amount of income, the advantages of filing jointly as a married couple are minimized, and it is more advantageous to file separately.

Understanding Personal Income Taxes

Personal income tax is the tax that governments levy on income that is generated by individuals. Taxes are a government’s main source of revenue, and the government uses it to fund public investments, services, and to pay obligations. Personal income tax is applied to all sources of income for an individual that includes, but is not limited to:

• Employment incomeRemunerationRemuneration is any type of compensation or payment that an individual or employee receives as payment for their services or the work that they do for an organization or company. It includes whatever base salary an employee receives, along with other types of payment that accrue during the course of their work, which
• Commission income
• Property income (rent, interest, dividends, and royalties)
• Capital gains income (sale of a property, sale of financial assets)
• Business income (sole proprietorship, partnership)

By law, all individual taxpayers must file an income tax return that determines the tax amount that is owed to the government. Most countries operate with a progressive income tax system, in which higher-income earners pay a higher tax rate, to redistribute the wealth and balance inequality.

In the United States, the Internal Revenue Service (IRS) is responsible for the collection of taxes and for enforcing tax laws. The Canadian counterpart is known as Canada Revenue Agency (CRA).

Married Filing Jointly Explained

Married filing jointly allows two married individuals in the U.S. to combine their income tax return into one filing; however, both spouses are equally responsible for the tax return. If one of the spouses engages in any form of tax fraud, then both spouses will be equally liable for the penalties incurred, unless one of the spouses can prove that they were not aware of the mistake and did not benefit from it.

Tax fraud or tax evasion is when a taxpayer deliberately misrepresents the state of their affairs to tax authorities, as to reduce the amount of tax owed to the government. For example, a self-employed sole proprietorSole ProprietorshipA sole proprietorship (also known as individual entrepreneurship, sole trader, or proprietorship) is a type of an unincorporated entity that is owned only may want to report less revenue from their business than they earned to reduce the amount of taxes on business income that they owe.

Conditions of Married Filing Jointly

A married couple can file jointly if the following conditions are met:

• The married couple was married as of the last day of the tax year. Therefore, as of December 31 of the previous year, the married status of the couple applies to the whole year. As an example, if a couple gets married on December 30, under tax law, they would’ve been considered married for the entirety of the year even though they were only married for one day of the year.
• Both spouses agree to file a joint tax return.

The definition of either being married, legally separated, or divorced depends on other factors as well. For example, a couple is considered unmarried if they’ve lived apart for a period longer than six months.

Married Filing Jointly vs. Filing Separately

If a couple decides to utilize married filing jointly status, their combined tax liability is often lower than the sum of the separate individuals’ tax liabilities if they were to file separately. The reason is that there are additional tax benefits and deductionsSchedule ASchedule A is an income tax form that is used in the United States to declare itemized deductions.It is attached to Form 1040 for taxpayers that pay annual income taxes. Taxpayers can choose to claim either a standard tax return deduction or itemize their qualifying deductions line by line. that married couples can qualify for that do not apply to taxpayers who file as a single individual.

Joint tax returns can provide benefits of a larger tax refund or a lower total tax liability. However, it is not guaranteed by any means. Tax laws in developed countries, such as the U.S. and Canada, are extremely complex and dynamically change each year.

Therefore, a couple may wish to seek assistance from a tax professional to find out if there is a benefit to filing jointly, or if it would be beneficial to simply file separately.

Related Readings

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• A-B TrustA-B TrustAn A-B Trust is an estate planning tool that married couples use to minimize estate taxes. Essentially, when the first spouse dies the trust is split into
• How to Use the IRS.gov WebsiteHow to Use the IRS.gov WebsiteIRS.gov is the official website of the Internal Revenue Service (IRS), the United States’ tax collection agency. The website is used by businesses and
• Married Filing SeparatelyMarried Filing SeparatelyMarried filing separately for tax purposes refers to a filing status for a couple in the U.S. who has been married as of the end of a tax
• Taxable IncomeTaxable IncomeTaxable income refers to any individual's or business’ compensation that is used to determine tax liability. The total income amount or gross income is used as the basis to calculate how much the individual or organization owes the government for the specific tax period.