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Old 12-08-2012, 03:33 PM
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Trying to figure out pros/cons for filing separately or jointly

Hi. About a year ago I moved to the United States with my wife. I'm a US citizen, my wife just received her permanent residency status.
I've been employed throughout 2012 and have been receiving a salary regularly. My gross income for 2012 will be around $47,000. As for itemizing, I believe that only the medical insurance premiums and medical bills qualify and I'm estimating they would total to about $5500 for the year.
My wife did not earn any income at all in 2012 since she didn't yet have her work permit.
My wife will be starting a new teaching job in January 2013 and she is currently filling out the paper work.
I have a few questions:
1. I'm curious to know if we should file taxes separately or jointly for 2012. We have no children. We have no other income other than my salary and we don't own property.
2. My wife needs to fill out a W-4 form for her new job which starts next month and she needs to mark whether she intends to file taxes separately or jointly for 2013. What should be the considerations for this?
3. Is it okay to mark one of the options in the W-4 form - either MFJ or MFS - and then change your mind when it is time to do your taxes?

I realize that a tax professional would certainly be able to give us the best answers, but because I believe that our case is really pretty straight forward and simple - that I have a feeling we can probably manage without hiring a professional.

Any information, tips and advise on this will be much appreciated!

Thank you!


Last edited by adifrank : 12-08-2012 at 04:10 PM.


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Old 12-09-2012, 11:11 PM
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“1. I'm curious to know if we should file taxes separately or jointly for 2012. We have no children. We have no other income other than my salary and we don't own property.”----->As you can see, there are pros and cons of filing jointly/separately with a spouse. Married couples typically obtain larger deductions and credits than singles, so most partners choose the MFJ option when completing their tax forms. However, whether they benefit more from this filing status depends on a number of factors, and in some cases it can be more financially advantageous to file separately. For this reason, newlyweds should weigh the benefits and drawbacks before making a decision on their taxes. In general, the MFS filing status provides fewer tax benefits than filing joint returns;since you are married, then you and your spouse can file separate tax returns. The MFS filing status is generally perceived as the least beneficial of all the filing statuses. That's because MFS taxpayers are not eligible to claim the following tax benefits; Tuition and fees deduction; Student loan interest deduction; Tax-free exclusion of US bond interest or EIC or etc. MFS taxpayers also have lower income phase-out ranges for the IRA deduction. Additionally, MFS taxpayers must both claim the standard deduction or must both itemize their deductions. In other words, one MFS taxpayer cannot claim the standard deduction if the other spouse is itemizing.HOWEVER, there is one clear benefit of filing separately. By filing a separate return, you are solely responsible for the accuracy and payment of tax related to that separate return. The IRS provides taxpayers with the option of itemizing on Sch A (in your case medical expenses incurred)or using a standard deduction. When itemizing deductions, you can include miscellaneous items like med expernes on a tax return. An advantage to filing separately occurs when you have few deductions when compared to a spouse. By contrast, on a jointly filed return, both you and your spouse are jointly responsible for the accuracy of the return and the payment of tax. A spouse who is unwilling to assume legal and financial responsibility for the other spouse's tax obligations should strongly consider filing separately. Couples where one or both spouses reside in a community property state will need to follow special rules for allocating income and deductions. Community property is considered to be jointly owned by both spouses. Accordingly, each spouse generally reports half of the total community property income on his or her separate tax return. Similarly, community property deductions are split in half, with each spouse reporting half the deduction on their separate return.You can decide to file either jointly or separately when you file an original return for a particular year. You can change your mind and switch from two separate returns to a single joint return within three years from the due date of the original return (without extensions). However, you can change your mind and switch from a joint return to two separate returns only by the April 15th deadline. To change your filing status, you will need to submit an amended return.
“ 2. My wife needs to fill out a W-4 form for her new job which starts next month and she needs to mark whether she intends to file taxes separately or jointly for 2013. What should be the considerations for this?”- The W4 helps the ER to determine how much federal income tax to withhold from EE's wages. Consequently, the EE should indicate his/her filing status and number of allowances on the W4.Your spouse’s filing status on W4(not MS but married) This will not impact her return at all. The filing status on her W-4 is just used to determine what tax bracket her taxes will be withheld from her paycheck. When she files her return, she will have to file as MFj with you, or married filing seperately . Think of filing her return at year end as a "reconciliation" of what she's paid to what she owes. She either gets money back or pays money in, depending upon what has been withheld from her check throughout the year.. Ifshe owes a lot of taxes at the end of the year. She might want to decrease her exemptions or vive versa. SHe just wants to make sure that she doesn't owe penalties at tax-time for underpayment.She may change these exemptions on her W4at any time. Her new exemption choices will be reflected in the next possible paycheck, depending on when during the payroll processing cycle she submitted the changes
“3. Is it okay to mark one of the options in the W-4 form - either MFJ or MFS - and then change your mind when it is time to do your taxes?”----->correct as described above.she can choose either married or Married, but withhold at higher Single rate.



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Old 12-09-2012, 11:54 PM
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thanks Wnhough so much for your detailed reply! i think i understand now.
i another question on this subject - specifically regarding the itemization for deduction - that maybe you can help me with. is there possibly a source online where i can learn exactly what can be itemized for deduction?
for example, concerning medical expenses - i think i read that insurance premiums can be itemized and co-pays as well. is this correct? i also assume that medicine can be itemized. what other over-the-counter products can be included in the itemized deduction list? contact lenses? vitamins?... is there a detailed list or set of rules that i can reference to know exactly what is possible to itemize and what not?

thank you!



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Old 12-09-2012, 11:59 PM
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actually never mind : )

i managed to find it myself here:
http://www.irs.gov/pub/irs-pdf/p502.pdf

thanks!



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Old 12-10-2012, 01:43 AM
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“ is there possibly a source online where i can learn exactly what can be itemized for deduction?”----->Tons of Websites on itemized dedcutions;
Please visit the IRS website here for more infoin detail; Tax Topics - Topic 500 Itemized Deductions
“for example, concerning medical expenses - i think i read that insurance premiums can be itemized and co-pays as well. is this correct?”------->Correct; co-pays are out-of-pocket medical costs, they qualfy as tax-deductible expenses. However, not everyone will be able to claim a deduction for co-pays and other medical costs. It depends on how you fill out your taxes;they are tax deductible if you itemize your deductions on Sch A of 1040. If you take the standard deduction, you cannot take the deduction for medical expenses on your return as you can see. You can only take the medical expense deduction on amounts that are over 7.5% of your AGI, OT MAGI/Taxable Income . So, for example, your AGI reported on 1040 line 38 is $30K.then 7.5% of that is $2.25K. You can only deduct amounts that are over $2.25KIf you have $3Kof medical payments, then you can only deduct $750.00;$3K-$2.25K. If you have $2,200.00 in medical payments, then you can't deduct anything as $2.25K>$2K, medical expense. ALSO, when you complete Form 1040, Sch A you total the tax deductible amount spent on itemized deductions and compare the total with your standard deduction. The larger of the two tax deductions, standard deduction or itemized deduction, will be the tax deduction to choose on your tax return, since it will lower the amount of federal income tax (by cutting your taxable income on line 43 of 1040)you will owe or increase the amount of tax refund you will receive.

“ i also assume that medicine can be itemized. what other over-the-counter products can be included in the itemized deduction list? contact lenses? vitamins?...”------->I guess no vitamins are deductible contact lenses are deductible(expenses associated with contact lenses may include costs for eye examinations and fittings, as well as the cost of the contact lenses and any replacement lenses); in general,drugs that may be obtained without a prescription, typically referred to as over-the-counter drugs, usually do not qualify for tax deduction. You may not include the cost for these drugs when adding up the total amount spent on medical and dental care. HOWEVER, drugs that are available over-the-counter may qualify as a tax-deductible medical expense if they were obtained by a prescription written by a qualified medical practitioner. Costs for insulin are tax-deductible, even when obtained without a prescription. Prior to the 2011 tax year, taxpayers were allowed to receive tax-free reimbursements from their company flexible-spending accounts; Archer medical savings accounts; or health savings accounts for over-the-counter drug purchases. These reimbursements are no longer authorized as of January 1, 2011, in accordance with provisions of the Affordable Care Act.




“ is there a detailed list or set of rules that i can reference to know exactly what is possible to itemize and what not?”------>Please visit the IRS website here for mor e info in detail; Tax Topics - Topic 502 Medical and Dental Expenses



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Old 12-10-2012, 08:04 AM
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thank you once again

so assuming that:
  1. my wife and i have no personal/legal preference whether we file MFJ or MFS
  2. our itemized deductions whether filing separately or jointly will add up to be less than the standard deduction of either method
  3. my wife was unemployed and earned zero income in 2012
  4. our only source of income throughout 2012 was my salary
  5. we aren't entitled to any tax credits

it is to my understanding that we would be better off filing MFJ rather than MFS because the standard deduction for MFJ is twice as much compared to the standard deduction for MFS. and because my wife had no income - she would not be owing any income tax anyhow, so the deduction would be from my AGI.

am i understanding this correctly?



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Old 12-10-2012, 08:11 AM
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Join Date: Dec 2012
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My friend suggested me to use turbotax software for calculation of tax and other computation,So please suggest about this and advice as i am unaware and want to know about this.


Last edited by TaxGuru : 12-21-2012 at 03:02 PM.


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Old 12-10-2012, 09:15 AM
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“1.my wife and i have no personal/legal preference whether we file MFJ or MFS”--> As said , I guess it depends on the situation; please read below.
2.our itemized deductions whether filing separately or jointly will add up to be less than the standard deduction of either method”----> Then you will have to take std deduction since you can’t itemize deductions on Sch A 1040 on your joint( or separate) return.
“3.my wife was unemployed and earned zero income in 2012”---> It is almost always beneficial to file MFJ rather than MFS. When you file jointly you get higher the bracket levels before entering the next tax group; when filing jointly, you indicate only the total amount of income for the couple.As only one has income, then you indicate only that amount; you do not indicate which person had that income or that the other person had none. Filing jointly usually gets you a bigger refund or a lower tax bill, and most married couples file joint returns.
4.our only source of income throughout 2012 was my salary
5.we aren't entitled to any tax credits

“it is to my understanding that we would be better off filing MFJ rather than MFS because the standard deduction for MFJ is twice as much compared to the standard deduction for MFS.”---------> In general yes; you will get double standard deduction and two exemptions;the std deduction for 2012 for MFJ is $11,900($5,950*2), and it is $5,950 for MFS filer($5,950 for each spouse). I mean as long as you file your 2012 return as MFJ, then you can deduct $11,900 on 1040 line 40. If you file your return as MFS, then you can deduct only $5,950 (your spouse can also deduct $5,950 on her return).As described previously, in general, the MFS filing status provides fewer tax benefits than filing joint returns;
“ and because my wife had no income - she would not be owing any income tax anyhow, so the deduction would be from my AGI.”--------->correct;only you have income.



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