Should I file joint or separate?

A reader asked the following question:

“I am the bread winner in the family and my wife has a part-time job but mostly stays home with our two kids. She mentioned she wanted to file her taxes early so she could get her refund more quickly. Should we file joint or separate?”

You will most likely benefit from filing a joint return. While she may end up with a refund if she files on her own, doing so will likely cause more of your income to be taxed at a higher rate. This is due to the tax brackets that are used. There are 7 tax brackets and each bracket is taxed at a different rate. Let’s say your wife is making $20,000 and you make $120,000. If she files on her own, she effectively gives up a part of the 15% tax bracket that you could use if you filed joint. In addition, there could be some tax deductions or credits that may be limited by filing separately.

The only way to know for sure is to prepare the returns as if you are filing joint, and as if you are filing separate. Then compare the two. Or better yet, take it to a tax professional as their software can usually do the comparison easily. But my guess is you will be better off filing jointly to save on your federal taxes.