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Q: This will be my first year filing taxes as a married man, and I'm confused about how I should file -- married filing jointly or separately. I completely trust my wife, and know her financial liabilities/health. My question is based more in the military venue. I am currently stationed in Iraq, and therefore my income is tax free. My wife is working as a server (waitress). Her taxable income (approx. $40k) will be quite a bit more than mine. Would it make more financial sense to file jointly, or separately?
A: Congratulations on your marriage, and thanks for all you are doing over there in the sand, wind, cold, and heat. In most cases, filing jointly makes the most sense … and dollars! Since you're a couple now, the goal is likely to pay as little in taxes as possible.
To illustrate your scenario, I'm going to assume that you have no children, do not itemize, you were in a tax-free combat zone throughout the entire year, and that you and your wife did have adjusted gross income of $40,000 (including dividends, interest, and her wages). In this scenario, if you file jointly, your total federal income tax would be around $2,300 (that takes into consideration the standard deduction and personal exemption).
On the other hand, if you both filed separately, you would have zero tax, but she would owe around $4,300. So, if you want to keep momma happy and do what makes the most sense for you both, it appears filing jointly is probably the way to go.
There are a few instances when it makes sense to file separately. One example would be if one of you had extreme health expenses that exceeded 7.5% of that person's income. As with all things tax-oriented, seek advice from a tax advisor or CPA. He or she can prepare your returns both ways and see what makes the most sense based on the specifics of your situation. Thanks for a great question!
June Lantz Walbert is a CERTIFIED FINANCIAL PLANNER practitioner with USAA Financial Planning Services. She is also a lieutenant colonel in the U.S. Army Reserve with 20 years of service. Walbert's basic branch is Air Defense Artillery. She writes a weekly advice column, "Ask June" on military.com. Follow June @AskJune_usaa.
Certified Financial Planner Board of Standards, Inc. owns the certification marks CFP and CERTIFIED FINANCIAL PLANNER in the United States, which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.
Views and opinions expressed by members are for informational purposes only and should not be deemed as an endorsement by USAA.