Tax season is drawing to a close, and many people have yet to get theirs done.  But don’t worry, you still have some time.  As a truck driver, you likely have a lot of expenses that rack up over the year.  You manage to keep most things personal and business separate, but your deductions are a lot higher than your spouses.  If you are submitting your taxes as Married Filing Jointly, you may be paying more in taxes than necessary.

Filing Jointly or Filing Separately

As you know there are two ways to file when you are married: together or separate.  Basically the difference is you either lump all of your earnings and deductions together, and your taxes are based on those numbers, or you each file a return with your taxes based on the individual numbers.  While most people will be better of combining their returns, there are some who will be better off with separate returns.

Married Filing Jointly

Should I File Separate?

For those who have their business set up as a sole proprietorship or a limited liability company (LLC), you may pay less in taxes if you file separately.  Here is how that works.

Let’s suppose your gross income for the year comes to $100,000.  But as a business owner you have a lot of expenses, and after all is said and done, you have a total of $50,000 that you can write off your taxes.  You combine this with your spouse’s and you are showing a gross income of $150,000 with that same $50,000 write off.  Your total combined income is $100,000 after deductions: this puts you in the 25% tax bracket, and you will owe right around $16,712.

Assuming the same incomes, and you and your spouse file separately, it will look like this.  You have an income of $50,000 and owe $8,356.  Your spouse has an income of $50,000 (minus his or her standard deduction), and owes $6,806.  Together your liability total is $15,162.  Filing separately saves you $1,550.

Keep in mind that these are very basic calculations that don’t take into account personal exemptions or credits, and even with similar numbers your tax liability may be vastly different.  Tax rates based on 2014 tax information.

Other Considerations for Filing Jointly or Separately

Just because you are a business owner with a lot of write-offs does not mean that you should file separately.  Keep in mind that you lose out on a number of deductions, such as IRA write-offs, education credits, adoption credits, and more.  Everyone’s situation will be different, but if you have a lot of deductions, then it is a good indicator that you should look into filing separate.

But there is a chance that you will want to file separately even if you do not have a lot of business expenses.  Since the Affordable Care Act went into effect, it has gotten harder to deduct medical expenses.  Now your expenses must total 10% of your income instead of just 7.5%.

Let’s suppose you and your spouse both bring in $50,000 after deductions but before tax.  If you, or your spouse, have medical bills of $9,000 they total just 9% of your total income.  But if you file separately, those bills now total 18% of one spouse’s income.  When filing jointly you can’t deduct them; when filing separately, they are deductible.

How to Decide to File

Fortunately it is not as difficult to determine joint filing or separate filing as it may seem.  This article gives you a starting point to look into it, but it may be as easy as a simple phone call. If you are hiring an accountant like ATBS, he or she should have the expertise to know which method is better.

Taxes can be complicated.  Every tax return is different and your situation will determine which method of filing is best for you.  Keep in mind that this article is not designed to offer any tax advice.  Rather it is designed to show you that there are some methods that will result in a lower liability, and when it comes time to do your taxes, you (and your tax advisor) should decide which method is best.

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Sean Bryant

Sean is a graduate of the University of Iowa where he received a Bachelor's of Arts degree in economics. After beginning his career in banking, he found his love for marketing. Before arriving at ATBS in 2014 he spent time working for two different technology startups as well as his own freelance marketing company.

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