A joint return is a single tax return filed by a married couple, which combines their incomes, deductions, credits, exemptions, and other tax items. In the United States, this is known as filing “Married Filing Jointly” and is one of the filing status options on the federal income tax return.
Filing a joint return often results in a lower combined tax than the total tax the couple would pay if they filed separately, which is known as “Married Filing Separately”. This is primarily due to the more favorable tax brackets and higher standard deduction amount available to couples who file jointly.
However, it’s important to note that when a couple files jointly, each spouse is jointly and severally liable for the tax owed. This means that each spouse is individually responsible for the entire tax liability. If one spouse understates income or overstates deductions, both are responsible for the resulting tax deficiency, unless certain relief provisions apply.
Whether to file jointly or separately depends on a couple’s specific circumstances, and they might wish to calculate their tax both ways to determine which method results in the lowest tax liability. It’s always a good idea to consult with a tax professional when making these decisions.
Example of a Joint Return
Imagine a married couple, John and Mary. John has an annual income of $70,000 from his job, and Mary has an annual income of $30,000 from her part-time job. They also have $10,000 in deductible expenses.
If they file a joint return, they would combine their incomes for a total of $100,000 ($70,000 + $30,000). After subtracting their $10,000 in deductions, their taxable income on a joint return would be $90,000.
The tax brackets for a married couple filing jointly in the U.S. are generally wider than for single filers or married filing separately, meaning a lower effective tax rate. The federal tax rate for a couple with a taxable income of $90,000 would be lower than if John and Mary were to file separately, each with their own respective incomes and deductions.
Keep in mind that the specifics of this example may vary based on changes to tax law or individual circumstances. It’s always a good idea to consult a tax professional or use a tax software program that can calculate the tax for different filing statuses and choose the one that results in the lowest tax liability.