Filing Taxes When Working Together and Running Your Own Business
As a business owner and a partner in a marriage, the decision on how to file your taxes can significantly impact both your personal finances and your tax liabilities. While it's tempting to opt for a joint filing, sometimes it might not be the most financially beneficial choice. We'll explore the intricacies and offer guidance on how to properly navigate the tax filing process.
Joint vs. Separate Filing: Considerations for Married Couples
First off, just because you are married doesn’t mean it’s in your best interests financially speaking to file married joint returns. Joint filing is often most advantageous and typically results in lower taxes. However, you should also consider filing married separately. This method can be beneficial if one spouse has significantly higher deductions, credits, or adjusted gross income (AGI) that could offset the lower tax bracket of the other spouse.
To make an informed decision, you should consult a tax professional or call the toll-free number 1-800-829-1040. They can guide you through the process and provide personalized advice based on your specific financial situation. Alternatively, you can file married jointly, where all income and deductions are combined and reported on a single 1040 form. When you file this way, you should include all relevant income, business earnings, and expenses on the form.
Dependent Filing for Your Son
Assuming your son is a minor or a dependent, the decision of whether to claim him on your return or let him file his own can be a bit tricky. If your son has income and is working, he might be better off filing his own return as a single taxpayer. This can help him prepare for future tax obligations and ensure he receives accurate tax treatment for his earned income.
Even if your son is a dependent, claiming him or not will not necessarily yield any tax benefits. There are no longer individual dependent exemptions as of recent tax laws. However, if your son meets the criteria to be a separate filer, he can enjoy his own deductions and credits.
Under these circumstances, it's important to understand the "Head of Household" (HOH) filing status. This status allows you to file separately and enjoy lower tax rates, larger standard deductions, and other benefits. You can qualify for this status if you are not legally married but have a dependent child and live apart from your spouse for more than six months during the tax year. Consult a tax professional to verify if you meet the qualifying criteria.
Navigating the Tax Filing Process
If you're unsure about how to properly file your taxes, don't hesitate to seek professional assistance. Tax professionals, such as accountants or tax preparers, can guide you through the process and ensure that all necessary forms and information are included correctly. Call 1-800-829-1040 for free advice or to get thorough guidance on what forms you need and how to file.
Remember, understanding your tax situation and properly filing your returns can save you money and ensure compliance with tax laws. Whether you decide to file jointly or separately, or let your son file independently, make sure to stay informed and seek professional advice when needed.