Newlyweds mull filing separately or jointly

DEAR HARRY: My wife and I got married last November. From what we have seen, we may either file our tax returns separately or jointly. We have heard strong statements supporting both ways. What's the real raw meat and straight whiskey on this?

WHAT HARRY SAYS: Because there are so many variables, the best thing to do is to try it both ways. That could be time-consuming, but many bucks can be lost making a wrong decision.

The general rule is that a joint return is usually better if the spouses' incomes are widely different, and separate returns are usually better if the incomes are close. However, the differences in how deductions are handled could overshadow that rule. There are floors under certain deductions that can easily mean that separate returns are the better choice. For example, there is an exclusion of 10 percent of adjusted gross income (make that 7.5 percent if either spouse is at least 65) against a medical deduction. That gives you a lower deduction for such costs on a joint return.

There are also income differences (such as capital gains and qualified dividends) that have higher rates for higher income. Nonincome/deductions should be considered, such as the possibility of a spouse evading taxes and putting you on the hook with a joint return.


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