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People making over $100k a year are in higher tax brackets, which means that they generally have to pay a higher percentage of their income in taxes. If you're married, you have the option of filing jointly or separately, and there's no answer that works for everyone. Instead, you'll need to examine the effect filing jointly has on your tax bracket, deductions and overall tax liability.
Everyone who files taxes is eligible for a standard deduction, which reduces your total taxable income. For married couples filing jointly, the standard deduction as of 2012 is $11,900. If you file individually, you'll each get a deduction equal to half this amount of $5,950 each. Additionally, everyone gets a personal tax exemption of $3,800 -- or $7,600 for married couples. This is the amount of your income on which you don't have to pay taxes. If one of you doesn't work, filing together can be a wise strategy because it means the working party gets to benefit from the non-working party's deduction. The person who does not work might not otherwise file taxes.
Your tax bracket is determined by your income, and if you file jointly, your tax bracket is determined by your combined income. Married couples can make more money jointly before they are pushed into a higher tax bracket, so if one of you makes significantly less money than the other, filing jointly could be a good idea. On the other hand, if you both make significantly above $100k, filing together might push you into the highest tax bracket. For example, if you make exactly $100k, your tax bracket as an individual would be 28 percent as of 2012. But if you and your spouse jointly make $100k, your tax bracket would be only 25 percent.
In addition to standard deductions and exemptions, you can itemize deductions such as business expenses, job-related educational expenses, tuition and most medical care. These deductions lower your overall tax liability, and if one person has a significant number of deductions, then filing together might lower the total amount of taxes the two of you pay together.
If you file jointly, both you and your spouse are jointly liable for your shared tax burden. This means that, if one party makes no money and the parties get divorced, the person who earned no money would still be liable for the shared tax debt. For couples having marital difficulties or who have a serious disparity in income, this is a concern that might warrant filing separately.
- CBiz: IRS Releases Official 2012 Tax Rate Brackets, Standard Deductions, Other Inflation-Adjusted Figures
- IRS: In 2012, Many Tax Benefits Increase Due to Inflation Adjustments
- Forbes: 2012 Federal Income Tax Brackets
- Fox Business: Married Filing Jointly, or Separate
- Bankrate.com: Is Filing Taxes Jointly a Good Idea?
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