After job loss, should we file taxes separately?

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Q. We file our taxes “married filing jointly.” My husband lost his job and gets unemployment, but he’s also close to retirement age so I don’t see him going back to work. Would it make sense for us to file separately? We have a mortgage but no other important deductions.
— Taxpayer

A. You should meet with a tax preparer who can run the numbers for your specific situation, but here are a couple of items to keep in mind.

In most cases, filing jointly offers the most tax savings, particularly where the spouses have different income levels, as it seems to be for you and your husband because he lost his job, said Gail Rosen, a Martinsville-based certified public accountant.

She said the “averaging” effect of combining the two incomes can bring some of it out of a higher tax bracket. For example, if one spouse has $75,000 of taxable income and the other has just $15,000, filing jointly instead of separately for 2019 can save $2,447.50 in taxes.

“Note that there is a potential for tax savings from filing separately, however, where one spouse has significant amounts of medical expenses,” Rosen said. “Beginning in 2019, medical expenses are deductible only to the extent they exceed 10 percent of adjusted gross income – it was 7.5 percent for 2018.”

Other tax factors may also point to an advantage with a joint return, Rosen said. For example, the child and dependent care credit, adoption expense credit, American Opportunity Tax Credit and Lifetime Learning Credit are available to a married couple only on a joint return.

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This story was originally published on June 12, 2019.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.