Question for the Money Doctors
Question submitted on May 11, 2021.
QuestionMy wife sold family property and will receive about $800 K . She is a retired teacher making $19000 a year. We both have tax qualified annuities and one none qualified annuity. Can we file separately to save on taxes
In most cases, a married couple is better off filing jointly than separately (i.e., overall lower taxes when filing jointly). This is due to the way many of the tax rules are structured, including some tax breaks that are not available to those filing separately. Unfortunately it is impossible to tell from your information whether your taxes would be lower if filing separately, but the answer is probably not, unless there are more "complications" to your tax situation. Also, the amount of taxable gain related to the property sold will depend on her "tax basis" in the property.....so unless her basis is zero, she will not have to show the full $800,000 as gain on the tax return. I hope that helps.
For additional information visit //www.360financialliteracy.org/