Tax Tip of the Week | No. 236 | How Are You Going To File Your Taxes?

Tax Tip of the Week | February 12, 2014 | No. 236 | How Are You Going To File Your Taxes?Some tips are worth repeating...a reminder each year:

If you were legally married on 12/31/13, the IRS considers you married for the entire year of 2013.You now must decide if you are going to file as Married Filing Jointly (MFJ) or Married Filing Separately (MFS).  Note, however, if you file MFJ it is an irrevocable election---you cannot go back and amend a MFJ return to a MFS return.The primary reason to file MFS is to pay less tax.  It is a particularly beneficial filing status to save on the amount of Ohio taxes paid.  Another reason to file separately is to avoid joint liability.  Each spouse who signs a joint return is responsible for the accuracy and tax liability on the return.Many times, for example, in a second marriage situation we see couples who have a desire to maintain separate financial responsibilities.  While this is understandable, it could lead to paying several thousand dollars in additional taxes.  If you file MFS, you will lose the following:-    Credits for child care, education, adoption and the earned income credit-    Student loan interest deduction, tuition and fees deduction, and savings bond interest deduction-    If one spouse itemizes, or takes the standard deduction, the other spouse must do the same.  (That is, one cannot itemize and the other take the standard deduction.)-    A greater percentage of your Social Security benefits may be taxable-    Your ability to contribute to traditional or Roth IRAs will be greatly limited-    Capital losses will be limited to a maximum of $1,500 per spouse-    Passive losses will be limitedBefore filing your return you need to look at both MFJ and MFS to see which lowers your tax burden the greatest.

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Rick Prewitt - the guy behind TTW...until next week.