Family Income Tax
Everyone has felt the sting of income taxes being taken out of their paychecks for family income. From the time you were 16, to decades into your career, income taxes have been there every step of the way. Income taxes have become a way of life for almost all of America’s workers family income. However, when you start a family and need to figure out a family income tax return, it gets a little more complicated.
A family income tax is the combined taxes levied on the income of you and your spouse. In most cases, all of your income is taxed, as opposed to corporate income taxes that are taxed the net family income.
Filing Status for Family Income Tax Return
Before sending in your family income tax forms, a married couple needs to figure out what kinds of returns they would prefer, and how they are going to file their status. Determining your filing status also helps determine whether or not you are eligible to claim certain deductions and credits.
There are five filing statuses:
- Single
- Married Filing Jointly
- Married Filing Separately
- Head of Household
- Qualifying Widow(er) w/ Dependent Child
As you can see, the filing status largely depends on your marital status. There are stipulations for annulled marriages, divorces, married persons living apart, and deaths that can be found at the IRS website.
Filing Family Income Taxes Jointly vs. Separately
If you are married and decide to file jointly, this means you and your spouse will get a joint return based on your combined income and combined allowable expenses. According to the IRS website, if you and your spouse decide to file a joint return, your tax may be lower than your combined tax for the other filing statuses. Also, your standard deduction (if you do not itemize deductions) may be higher, and you may qualify for tax benefits that do not apply to other filing statuses.
- How to file - If you file as married filing jointly, you can use Form 1040 or Form 1040A. If you have no dependents, are under 65 and not blind, and meet other requirements, you can file Form 1040EZ. If you file Form 1040 or Form 1040A, show this filing status by checking the box on line 2. Use the Married filing jointly column of the Tax Table, or Section B of the Tax Computation Worksheet, to figure your tax.
You might want to file separately if you want to be responsible for only your own taxes or if it results in fewer taxes than filing a joint return does. Keep in mind, however, that your tax rate is generally higher when a married couple files separately rather than jointly. Also, if you have children and are filing separately, you cannot take the credit for child and dependent care expenses and the amount you can exclude from income under an employee’s dependent care assistance program is cut in half, limited to only $2,500.
- How to file - If you file a separate return, you generally report only your own income, exemptions, credits, and deductions on your individual return. You can claim an exemption for your spouse if your spouse had no gross income and was not the dependent of another person. However, if your spouse had any gross income or was the dependent of someone else, you cannot claim an exemption for him or her on your separate return.
Family Income Tax Checklist
LendingTree put together a checklist for families and individuals. Make sure you have all the following information when preparing your family income tax returns:
- Social Security Numbers (personal, spouse, dependents, child care provider)
- Personal Income (W2, unemployment income, brokerage transactions, social security benefits, state income refunds, retirement plan distribution, dependents, and more)
- Self-employed income (partnership income, business income, rental property income, business-related expenses, and more)
- Homeowner Information (mortgage interest, rent paid, property sales proceeds, real estate taxes, moving expenses)
- Personal Expenses (charity, alimony, medical/dental, wages to household employees, education tuition, student loan interest, child care expenses, and more)
