Major life milestones often have a major tax impact. Changes in your marital status, having a baby or adopting a child can have significant impact on your taxes. This is the place to ask questions about dependents, real estate, and other various scenarios that play a significant role in what taxes you pay.
10-23-2017 05:14 PM
I am a teacher that makes around 50k my husband is a self employed artist that sells prints online to the tune of 3-6k a year. Last year when we married we filed separately. This year I would like to file together if possible but I'm not sure how that would effect us. I usually get a return of 1000-1500 dollars, and he always has to pay the taxes on his sales. What would be best for us?
10-23-2017 06:18 PM
Welcome to the H&R Block community.
I would actually consider amending your return from last year into a joint return. You are actually taxed at a higher rate when you file separately and that's just for starters. There are lots of credits that you become ineligible for automatically when you file separately and there are many benefits that are limited or eliminated. For example, with an income of $50,000 and a filing status of MFS you lose the ability to contribute to a Roth IRA altogether, and if one of you itemizes deductions then the other must also deduct on Schedule A rather than take the standard deduction even if their deductions are equal to zero.
I do have a question for you? How is your husband reporting his business income? The correct answer is he should be reporting it on Schedule C and then deducting his expenses from it, and the Schedule C goes with the personal return no matter if you file jointly or separately. No doubt he has some expenses from selling online & from creating the art he sells. His taxable income is his total sales (revenue), but rather it's his net income after expenses. If he has $6,000 in sales but $5,600 in legitimate expenses for a year for instance then he does not owe any self-employment tax.
If he has a loss after taking all expenses into account then your husband does not need to file a return if filing separately. If filing jointly and he has a loss that would reduce your taxable income on the 1040 and give you more of your withholdings back.
What I would do here is either complete your tax return both ways or figure your expected tax both ways using a tax calculator (the IRS and H&R Block websites both have one) and see where you end up. Although filing jointly is almost always the better option, there are as you can see a lot of things that can potentially affect the outcome of your tax return, so a calculator or a run through with a tax professional is really the best way to make the determination of which way of filing is more beneficial.
I can give you a ballpark idea of what the outcome of filing each way would be, but I would need to know what your husbands expenses generally are for his business, if you are regularly eligible for any tax credits, if you have any dependents, and how much your withholdings are from your teaching job. You can click on my name to send me that info in a private message rather than put everything out here in the open if you would like me to compare the filing options for you.
Does your husband work from home and/or make business related trips to pick up supplies, take things to the post office, etc.? If so let me know and I'll give you some information on the home office & vehicle use deductions. A lot of people who could take these two deductions don't realize that they can.
If you have any other questions I'll be glad to help.
Senior Tax Advisor (Tampa, FL)