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From Stephen Clifford, Registered Investment Advisor Representative
The Winfield Group - Scottsdale, Arizona


If you are married, you generally have a choice of filing your federal income tax return(s) as married filing jointly (MFJ) or as married filing separately (MFS). Because of a number of special rules, your combined tax will often be lower if you file married filing jointly than if you file married filing separately, but that is not always the case. You should generally calculate your tax both ways to determine which filing status results in the lower total tax.

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Basic rules

You and your spouse can file as married filing jointly if you are considered married and you both agree to file a joint return. On a joint return, you and your spouse report your combined income, exemptions, deductions, and credits. You are both responsible for any tax, interest, or penalty due on a joint return. Alternatively, you and your spouse can file as married filing separately. On a separate return, you each generally report only your own income, exemptions, deductions, and credits. You each are responsible only for any tax, interest, or penalty due on your separate return.

Special rules for married filing separately

Maybe not unexpectedly, many tax items for MFS are exactly half of the amounts for MFJ:
• The tax brackets (for MFS, higher tax rates are reached at lower income levels than for MFJ)
• The phaseout thresholds for personal exemptions
• The limitation thresholds for itemized deductions
• The limits on the amount of income that can be excluded under an employer's dependent care assistance program
• The alternative minimum tax exemptions
• The amount of capital losses you can deduct
• The income levels at which the child tax credit is reduced
• The income levels at which the retirement savings contributions credit is reduced
• The income thresholds for the additional 0.9% Medicare tax on Social Security wages and self-employment income and the 3.8% Medicare tax on net investment income

Some items are not available for MFS:
• The credit for child and dependent care expenses (in most cases)
• The earned income credit
• The exclusion or credit for adoption expenses (in most cases)
• The American Opportunity credit and the Lifetime Learning credit
• The deduction for student loan interest, and the deduction for tuition and fees
• The exclusion for interest from qualified U.S. savings bonds used for higher education expenses

Other rules that apply to MFS:
• With MFS, if your spouse itemizes deductions, you cannot claim the standard deduction, and even if you claim the standard deduction, the standard deduction for MFS is half the amount for MFJ
• The thresholds for taxation of Social Security benefits are lower for MFS than for MFJ
• The phaseout thresholds for deductible contributions to a traditional IRA (if you were covered by an employer retirement plan) or for contributions to a Roth IRA start at $0 for MFS

Something else to consider

If your adjusted gross income (AGI) for MFS is lower than for MFJ, you may be able to deduct a larger amount for certain deductions that are deductible only to the extent they exceed a percentage of your AGI (e.g., medical expenses, casualty and theft losses, and job expenses and other miscellaneous deductions) for MFS. For example, medical expenses are generally deductible only to the extent they exceed 10% of AGI. By claiming medical expenses on a separate return with a lower AGI, the amount of medical expenses that can be deducted may be increased.

New rules for same-sex marriages

In response to a 2013 Supreme Court decision invalidating a key provision of the Defense of Marriage Act, the IRS has ruled that same-sex couples who were legally married in a jurisdiction that recognizes their marriage are treated as married for federal tax purposes, regardless of whether the jurisdiction the couple lives in recognizes same-sex marriages. However, the rule does not apply to registered domestic partnerships, civil unions, or similar formal relationships recognized under state law. As a result, legally married same-sex couples generally must file their 2013 (and future) federal income tax returns as married filing jointly or married filing separately. Also, legally married same-sex couples may wish to consider filing amended returns for earlier years as married filing jointly or married filing separately. State tax treatment of same-sex couples varies widely.

The Winfield Group

The Winfield Group

Stephen Clifford
Managing Director
Scottsdale, Arizona
Irvine, California
800-543-9103
This e-mail address is being protected from spambots. You need JavaScript enabled to view it
www.winfieldgrouponline.com

IMPORTANT DISCLOSURES

Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, or legal advice. The information presented here is not specific to any individual's personal circumstances.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.


Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2014.