Inheritances are not considered income for federal tax purposes, whether you inherit cash, investments or property. Any subsequent earnings on the inherited assets are taxable, however, unless it comes from a tax-free source.
Q. Can You File a Tax Return Amended From Joint to Separate? A. No, only separate to joint.
You can use the 1040X to make an income tax amendment from married, filing separately to married, filing joint. This would allow you to claim several tax breaks that only joint filers can claim, including a lower tax rate on the total taxable income. You can also refile a tax return with a different filing status before the deadline of April 15. However, once you file a married, joint return, you can't amend the return to change your filing status to married, separate.
Advantages of filing jointly:
There are many advantages to filing a joint tax return with your spouse. The IRS gives joint filers one of the largest standard deductions each year, allowing them to deduct a significant amount of their income immediately.
Couples who file together can usually qualify for multiple tax credits such as the:
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American Opportunity and Lifetime Learning Education Tax Credits
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Exclusion or credit for adoption expenses
Joint filers mostly receive higher income thresholds for certain taxes and deductions—this means they can earn a larger amount of income and potentially qualify for certain tax breaks.
Consequences of filing your tax returns separately:
On the other hand, couples who file separately receive few tax considerations. Separate tax returns may give you a higher tax with a higher tax rate. The standard deduction for separate filers is far lower than that offered to joint filers.
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In 2017, married filing separately taxpayers only receive a standard deduction of $6,350 compared to the $12,700 offered to those who filed jointly.
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If you file a separate return from your spouse, you are automatically disqualified from several of the tax deductions and credits mentioned earlier.
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In addition, separate filers are usually limited to a smaller IRA contribution deduction.
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They also cannot take the deduction for student loan interest, or the tuition and fees deduction.
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The capital loss deduction limit is $1,500 each when filing separately, instead of $3,000 on a joint return.
When you might file separately:
In rare situations, filing separately may help you save on your tax return.
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For example, if you or your spouse has a large amount of out-of-pocket medical expenses to claim and since the IRS only allows you to deduct the amount of these costs that exceeds 7.5% of your adjusted gross income (AGI) in 2017 and 2018, it can be difficult to claim most of your expenses if you and your spouse have a high AGI.
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Filing separate returns in such a situation may be beneficial if it allows you to claim more of your available medical deductions by applying the threshold to only one of your incomes.
Beginning Jan. 1, 2019, all taxpayers may deduct only the amount of the total unreimbursed allowable medical care expenses for the year that exceeds 10% of their adjusted gross income.
Deciding which status to use:
The best way to find out if you should file jointly or separately with your spouse is to prepare the tax return both ways. Double check your calculations and then look at the net refund or balance due from each method.
Head of Household You may be able to file as head of household if you meet all the following requirements. 1. You are unmarried or considered unmarried on the last day of the year. See Marital Status, earlier, and Considered Unmarried, later. 2. You paid more than half the cost of keeping up a home for the year. 3. A qualifying person lived with you in the home for more than half the year (except for temporary absences, such as school). However, if the qualifying person is your dependent parent, he or she doesn't have to live with you. See Special rule for parent, later, under Qualifying Person. If you qualify to file as head of household, your tax rate usually will be lower than the rates for single or married filing separately. You will also receive a higher standard deduction than if you file as single or married filing separately.
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