Tax Filing Status

Physician's Money Digest, April30 2004, Volume 11, Issue 8

Caveat:

If you're married, filing a jointincome tax return seems like an easydecision, especially now that the newtax law has eased the marriage penalty.But there may be a tax advantage to filingseparate returns. To find out, haveyour tax professional run the numbersboth ways. One situation where separatereturns can work in your favor is ifyour spouse has the bulk of the medicalcosts and a relatively low income.Medical costs are only deductible to theextent that they exceed 7.5% of youradjusted gross income, so the deductionmay disappear if it's applied to theincome from both spouses. Applied tothe smaller income of the spouse withthe big medical bills, however, thededuction can have a much greatereffect. Married couples filingseparately may bump themselves into ahigher tax bracket; make sure the numberswork in your favor.