Filing your taxes can be stressful enough on your own, and filing with a spouse adds an extra layer of complexity to the process. Thankfully, there are many benefits to filing your taxes as a married couple, including deductions and credits that can be exclusive to married couples filing their taxes jointly.
If you’re filing your return with your spouse this year, here are a few tips that could save you money.
1. File jointly to lower your tax bracket
This one is important because many other tax benefits, some of which are on this list, come from filing your taxes jointly with your spouse. About 95% of married couples file jointly, and they do it because there are many benefits.
One of the most important benefits is that income for married couples filing jointly is placed in a lower tax bracket. For example, a single person making $200,000 has a marginal tax rate of 32%. But if a married couple with one income makes $200,000 for their household, the tax bracket is only 24%.
Having a lower tax bracket benefits almost all married couples, but there are a few times when it makes sense to file separately. People typically do this if they’re divorced, legally separated, or if the difference between spousal incomes is significant and one can claim many itemized deductions.
2. Contribute to your IRA
You can contribute money to an individual retirement account (IRA) if you earn an income. But there’s a special opportunity for married couples who file their taxes jointly, allowing an income-producing spouse to contribute to their non-working spouse’s IRA.
For example, if one spouse works and the other is a homemaker, the couple can contribute $6,500 to their IRA for tax year 2023 (or $7,500 if they’re over 50) for themselves and their spouse, for a total of $13,000.
For married couples with traditional IRAs, this means you can significantly lower your taxable income, even if one spouse isn’t earning an income. For example, if you contribute the total allowable $13,000 contribution in 2023, you could lower your adjusted gross income (AGI) by $13,000 and lower your tax bill.
3. Claim the earned income credit if you qualify
Married couples with low to moderate incomes may be able to save money on their taxes by claiming the Earned Income Tax Credit (EITC). The amount you receive depends on your income, marital status, and number of children you have.
For example, a married couple filing jointly, with a combined income of $55,000 and two children, could potentially receive an EITC of $938. If the same couple had three or more children, the credit would go up to $1,763.
You can determine whether you qualify for the EITC by answering questions on the IRS’s online EITC assistant. The Center on Budget and Policy Priorities website also has a helpful EITC calculator that estimates how much you might receive from the EITC based on your filing status, household income, and number of children.
You and your spouse can claim the credit even if you don’t have any children, as long as you qualify. The good news for those who qualify for the EITC is that if your credit is more than what you owe in taxes, you get the money as a refund.
4. Reduce your tax-filing costs
Married couples who file their taxes jointly don’t have to pay for separate filings, which could add up to significant savings during tax season.
The average cost to file taxes is between $300 and $600. If you file separately, that means you could pay $1,200 to file both your and your spouse’s returns. And if your specific tax situation is more complicated — if, for example, you’re self-employed or earned income in multiple states — you could pay much more to file.
If you hire a tax professional, the price of filing separate returns will likely be compounded because of the additional hours of work it will take.
5. Take the standard deduction
Married couples filing jointly can claim a standard deduction of $27,700 for the 2023 tax year. While some people think itemizing their deductions will save them more money on their taxes, most people benefit from taking the standard deduction.
Not only will you likely save money on your taxes by taking the standard deduction, but it’s also far less time-consuming than collecting all your itemized deduction paperwork. That’s probably why nearly 90% of filers take the standard deduction.
There are a few instances where itemizing pays off, including if you own a home and the total mortgage interest, insurance premiums, and real estate taxes are greater than the standard deduction. Or if you paid more than 7.5% of your AGI for out-of-pocket medical expenses, you may want to consider itemizing.
But for most married couples, you’ll save more money by taking the standard deduction.
One bonus money-saving tip
Tax software makes it easier than ever to maximize your deductions and receive available tax credits. The good news is that the IRS has partnered with some tax software companies, including TaxAct and TaxSlayer, to offer free filing for households that earn $79,000 or less in 2023.
You can find out more about the free filing option on the IRS’s website. Just be sure to have your tax return from last year available so you can enter your AGI from last year to see if you qualify.
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