First of all, congratulations. This year, filing taxes when you’re married comes with new choices for attaining substantial tax saving by maximizing the new tax codes. The goal in tax preparation is to take advantage of the right tax deductions and credits offering the most benefit to your lifestyle.
Legally, married couples have the choice of filing jointly or separately, but there are several considerations for a recently married couple. For this reason, it’s essential to talk with an experienced professional in Salt Lake City, UT.
Let’s look at the new tax laws and see how they affect a newly married taxpayer.
Standard Deductions
The most noticeable change effects personal taxpayers. Preceding tax codes combined the standard deduction ($6500) and the personal exemption ($4,050) for a total of $10,650.
There’s a new tax deduction benefit for individuals recently married and choosing to file separately without itemizing.
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- Filing jointly allows a standard deduction of $24,000.
- Married filing separate or single has a greater standard deduction of $12,000.
Tax Brackets
The good news. We are the best at offering tax help in Salt Lake City. Five of the seven approved tax brackets got a tax rate reduction. These new tax brackets have benefits for all taxpayers.
For the most part, married filing separately share similar tax benefits as single tax filers. One notable difference is between single filers, married filing separately and married filing jointly at the 35 percent tax rate.
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- Married filing separately at this rate are limited to earning up to $300,000.
- Married filing jointly can earn up to $600,000.
- Single taxpayers at this same tax rate can earn up to $500,000.
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Tax Credits and Deductions
Just because you aren’t filing small business taxes doesn’t mean they will be simple. You need to understand the difference between a tax deduction and a tax credit. Deductions reduce your taxable income. Credits reduce the amount of taxes owed. This year the new tax rules have some gainful options for married filing jointly and married filing separately.
Each has its status eligibility, threshold, or specific requirements. Tax preparation considerations are necessary when computing the overall tax credit and deductions for filing taxes when you’re married.
Child Tax Credit (CTC)
CTC requires the child to be under the age of 17 at the end of the year the credit is claimed. In 2018, CTC doubled its credit limit to $2,000 per child up from 2017 at $1,000. The credit multiples with each qualified child.
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- You must declare the child as a dependent on your 1040.
- The child must have lived with you for more than six months of the year.
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Pease Deductions
High-income earners itemizing can take advantage of allowable tax deductions for charitable donations, mortgages interest, state and local tax (SALT) and miscellaneous deductions.
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- Married filing separately have a threshold starting at $160,000 up to $221,250.
- Married filing jointly threshold begins at $320,000 up to $442,500.
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Lifetime Learning Credit (LLC)
Students enrolled in eligible educational institutions qualify for tuition and expenses paid during the year. This credit helps to off-set the cost for higher education degrees, and courses to improve job skills.
Married taxpayers in Salt Lake City, UT have until April 15, 2019, to decide which filling process offers the most advantages when it comes to reducing your tax liabilities.
Filing separate returns may allow for additional deductions connected to the new thresholds for a single income. On the other hand, you may find a better tax strategy by talking with a tax expert.