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Generally speaking, is it pretty much the same? Or file separately could end up paying more?
Not necessarily.
Separate tax returns may give you a higher tax with a higher tax rate. The standard deduction for separate filers is far lower than that offered to joint filers. In 2019, married filing separately taxpayers only receive a standard deduction of $12,200 compared to the $24,400 offered to those who filed jointly.
The IRS strongly encourages most couples to file joint tax returns by extending several tax breaks to those who file together. In the vast majority of cases, it's best for married couples to file jointly.
If you file a separate return from your spouse, you are automatically disqualified from several of the tax deductions and credits. Separate filers are usually limited to a smaller IRA contribution deduction.
But there may be a few instances when it's better to submit separate returns:
for example if one of you has a large amount of out-of-pocket medical expenses to claim.
It depends. What are your incomes and deductions? In general I would say file joint.
Go to the IRS site and find free tax software and do your return both ways. You can estimate your 2019 numbers and use the 2018 software to test.
Generally speaking, is it pretty much the same? Or file separately could end up paying more?
It will depend. Also there are credits your cannot get if you file separately and to contribute to an Roth you AGI can't be over like 10k if filing separate.
Does filing jointly or separately matter to your financial situation? We keep our finances completely separate, no joint accounts or assets, so in my mind separate makes sense but if we can file jointly and save money but without it in any way implying we are jointly doing our finances that would be ideal.
Generally speaking, is it pretty much the same? Or file separately could end up paying more?
Hahah - yes, singles and single filing will almost always have you paying more in taxes - being married gives you much higher deductions so a lower tax bill in general unless you have some unusual situation.
If one spouse itemizes, the other spouse must also, so you really need to run the numbers. In the majority of cases, filing jointly is the way to go.
I agree, but running the numbers is complicated. I am NOT a tax accountant (but my brother is ) and filed separately only twice. Once was in NJ when we avoided having the second income taxed fully at the highest marginal rate by NJ by filing separately for Federal (NJ allowed separate filing only if you did for Federal). The other was the year I divorced. I knew the Ex wouldn't file anything and wanted to keep my tax situation separate. At the time (1997) I think NJ still taxed capital gains on your residence if you didn't buy another. I did and he didn't.
Anyway- when you file separately, deductions such as Medical expenses can be deducted only by the one who incurred them. Other deductions such as mortgage interest and property taxes on jointly-owned property can be "juggled"; the IRS doesn't care who takes them as long as you both itemize and the total deductions add up to the actual amounts. That's the part that's complicated.
I'd think you'd need to at least run the "endpoint" scenarios- Spouse A takes all the joint deductions except for what Spouse B needs to get up to the Standard deduction, and vice versa. Then there's the new SALT limitation, which was $10K last year; I'm sure you can't deduct more than $10K by having each spouse deduct half when they exceed $10K.
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) and filed separately only twice. Once was in NJ when we avoided having the second income taxed fully at the highest marginal rate by NJ by filing separately for Federal (NJ allowed separate filing only if you did for Federal). The other was the year I divorced. I knew the Ex wouldn't file anything and wanted to keep my tax situation separate. At the time (1997) I think NJ still taxed capital gains on your residence if you didn't buy another. I did and he didn't.
