Filing Jointly
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Question: Should I file married filing jointly or seperately?
My husband is getting out of the military and receiving a severance of $117,000.00. On top of his regular salary for 2006 this will put us over $200,000.00. I also work and make $30,000.00/year. We have two children ages 4 months and 4 years old. I am trying to find out if it would be more beneficial for us if we were to file married jointly or seperately? IF we filed seperately would I be able to use the children as deductions on my return?
Answer: Married filing separate is usually NOT a desireable option for anyone – especially in your case. First of all, your husband makes WAY more money than you! In this case, we usually recommend that you file joint. Also with kids, you would not qualify for most of the child credits by filing separately. You have also not given us enough information as to whether one or the other of you will itemize. If you file separately, either you both must itemize, or one of you will have to forego the standard deduction – which would be $5000 with this filing status. Bad call. Or you would both have to take the standard deduction. You are also not talking about bank accounts, property, etc..etc….Let’s say this $117,000 he’s getting is his ENTIRE income for the year – if you decided that you would both just take the standard deduction: by filing separately – assuming there is no other income from interest, etc..etc…you husband’s tax (based on 2005) would be $26200 and your tax would be $1945 which means a total of $28145 in taxes for your household. This takes into consideration that YOU would be the one claiming the kids. However, if you file JOINT, your tax would be $24508. That’s a difference in $3637! That is BEFORE applying child related tax credits. So that number could be much greater. It would certainly be much greater if this $117,000 severance does NOT reflect his total income for the year! Also, don’t forget, this is based on 2005 and only on the information you have given. I think you can see that married filing joint is probably the best option for you.
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