Should We File Jointly or Seperately?

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Couples who were married at any point during the year are viewed as married for the entire year. Filing jointly allows the couple to use the tax table or rate schedule , which operates to average the tax over both individuals and produce tax savings. Joint filing is also necessary in order to take advantage of certain tax breaks. However, there are some situations in which filing separately may make sense.

The following tax breaks only apply to married filing jointly taxpayers:

  • The $25,000 rental loss allowance
  • Credit for the elderly or permanently disabled
  • IRA deduction for a nonworking spouse
  • Education credits
  • Tuition and fees deduction
  • Student loan interest deduction
  • Dependent care credit (unless living apart for the last 6 months of the year)
  • Earned income credit (unless living apart for the last 6 months of the year)

If you receive Social Security benefits, joint filers may need to include only 50% or perhaps none of the benefits in income; separate filers automatically must include 85% of benefits in income.

Even though there are compelling reasons to file jointly, there are two key situations in which separately filing is advisable:

  • To limit tax liability for the other spouse. If a joint return is filed, both spouses usually are liable for the tax. When one spouse has concerns about the other spouse’s tax positions, separate filing will avoid liability related to the other spouse’s positions that could result.
  • To maximize deductions and lower taxes. If couples itemize and the spouse with the lower income has greater medical, casualty and theft, and/or miscellaneous itemized deductions (deductions that have adjusted gross income thresholds), separate filing can enable greater write-offs and result in lower total income tax for the couple.

Our Best Advice:

There is not a blanket answer as to which filing status is most beneficial since every situation is different.  When in doubt about which filing status to use, figure your taxes both ways—joint and separate—and compare your results.

Why You Should Always Hire A Tax Professional.

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I have been asked many times over the years why people should hire a professional to prepare their taxes as opposed to preparing their own return.  In my opinion the decision to have a professional prepare your taxes is as big of a no-brainer as there is. This is because of my experience in the income tax industry and the horror stories of self-prepared returns that I have witnessed. However, I can see how some people might not understand why they should hire a high quality tax professional rather than attempting to prepare them on their own.  Throughout this article I will point out several of the reasons everybody should have their taxes prepared by a professional.  Keep in mind that when I say a tax professional I mean someone who is qualified, has ample experience, and is willing to speak with you personally to explore your individual tax situation to best maximize your deductions.

The first thing I like to ask people is whether they go to a medical professional to diagnose what affects their health? Or whether they would go to court without a law- professional representing them?  Personally I do not, because I believe in specialization.  I want a professional carpenter putting on the addition to my house, an electrician to do the wiring, and a mechanic to work on my car.  These people do this everyday, have had extensive training and know what they are doing. This is why I cannot imagine individuals attempting to do something they do once a year and that has such a large financial impact on their lives, like preparing their tax return.

I have witnessed so many cases in which people have either caused an audit because what they have included on their return or have cost themselves thousands of dollars by missing credits or deductions that they were eligible for.  I currently have many clients who at one-time prepared their own returns and would never do it again because they now see the benefits of having a professional tax preparer.

What is the thing that we never have enough of and that we can never get back once it is gone?  Yes, time.  Recent government estimates show it takes taxpayers 28 hours and 30 minutes to complete an average tax return with schedules A and B.  Don’t you have better things to do with your time?  My clients put all of the information they receive in a folder and bring it into me to complete their tax return.  On average my clients come in, meet with me, and have their returns filed electronically in under an hour. That is quite a savings in time.

Another reason to hire a tax professional is that you do not keep up with current tax law.  Congress is constantly passing new laws, the IRS comes out with new rulings, and judges make new decisions all the time, all which directly affect your tax situation. How many of you not only read about all these decisions in the newspaper, but research them thoroughly to see how they affect your individual tax situation?Professional tax preparers subscribe to newsletters, press releases, and alert services that keep them abreast of every changing tax law.  In addition, professional tax preparers attend tax education courses throughout the year and learn from experts, IRS agents, and state officials.

One of the best commercials I have seen is where the husband gets into a little tax trouble and asks his wife what he should do.  He obviously had used a do-it-yourself tax software, so she told him to ask the box.  This is so true.  I receive telephone calls throughout the year from clients who have received letters from the IRS and do not know what to do, have tax planning questions, or simply have to make a decision in their life and want to know how it will affect their taxes.  I just wonder where people who prepare their own taxes go for that type of information.  Like with all high quality tax preparers I am available year round to help clients out with any tax questions or concerns that they might have.  Keep in mind if you make an important decision in your life, chances are it will affect your taxes.

Finally, by using a high quality tax preparer you are actually lowering your chances of an audit. Tax professionals know the thresholds at which deductions throw up red flags. By informing you that your charitable deductions are extremely high, you might be able to eliminate an audit of your entire return.  Statistics are available that track average taxpayers deduction amounts and tax preparers know this information and can tell you when your deductions are greatly exceeding these averages.  I have made these itemized deduction averages available in The Audit Angel:  Your Essential Income Tax Organizer and Mileage Log, which you can order at  If you prepare your own taxes you won’t know if your deductions are raising a red flag and you might either take less deductions than you could or take way too many deductions and draw attention to your return.

I urge anybody that I speak with to hire a high-quality tax professional to complete their tax returns.  I have personally been in the income tax industry for over ten years and provide my clients with personalized and expert income tax service.  I am available year round to help with any tax related matter.  You can reach me at 651-647-4935,, or on my website at If you have any questions about my services or any other tax related matter, or would like to set up an appointment for this coming tax season please call me anytime.

Do I have to pay income taxes on the sale of my house on my tax return?

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One of the most misunderstood concepts that I have experienced over many years as a tax return preparation specialist is what happens to proceeds from the sale of a home? Is it taxable? Do I have to claim it on my tax return? So please allow me to answer any questions about tax return preparation that you might have.

First of all, you can sell your principal residence of which you have lived in for 2 of the past 5 years and have up to $250,000 of gain if single or $500,000 if married without having to pay any capital gains tax on it. It is important to note that I said gain, not sales price. For example if you purchased a house in 2003 for $150,000 and it was the only home that you lived in, you could sell it for $400,000 if single or $650,000 if married and not have to pay any capital gains tax.

Now, even if you do not meet the 2 out of 5 year ownership requirement you are entitled to a reduced maximum exclusion limit if the primary reason for your sale was a change in your place of employment, health reasons, or unforeseen circumstances. For example, a taxpayer who sold his home in order to acquire the space needed to care for his recently disabled wife was entitled to a partial exclusion. The IRS ruled that the sale in this case was because of a qualifying health reason of the homeowner.

Regulations contain several situations that constitute unforeseen circumstances, including divorce, casualty, or multiple births from the same pregnancy. The IRS continues to expand the definition of unforeseen circumstances. Recently the IRS has held that a move caused by crime in the neighborhood was an unforeseen circumstance, allowing the homeowner to claim a partial exclusion on his tax return.

A partial exclusion is figured by multiplying the dollar limit ($250,000 for single or $500,000 if married) by a fraction, the numerator of which is the number of days of ownership and the denominator of which is 730 days. To illustrate: You are a single person and purchased a home for $300,000 90 days ago and have now been transferred by you employer across the country. You would multiply $250,000 by (90 / 730) and see that you would be able to sell your home for a gain of up to $30,821 and not have to pay any capital gains tax on it.

If you have any questions regarding the home sale exclusion or any other tax preparation return related matters or if you would like us to help in the preparation of your income tax return this season please contact us at (651) 647-4935 or visit us at

Jeff Bergerson founded Bergerson Tax Services (BTS) seven years ago and pilots a rapidly growing practice in St. Paul, Minnesota. Jeff has written many articles offering tax related strategies, tax return, tax preparation, and business guidance.

Bergerson Tax provides individuals and small business tax preparation and tax return planning. He can be reached on the web at or by email at

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