Married Filing Separately or Jointly?

There are several tax decisions to consider before filing tax returns as a couple after marriage. Namely, there are two status options: Married Filing Separately and Married Filing Jointly. There are advantages and disadvantages to each of those options to weigh in on. It’s recommended to get the neutral input of a professional tax relief attorney to assist in choosing the best option for your situation. Below, the advantages and disadvantages of each filing status will be explained.

Filing jointly qualifies the couple for several valuable tax breaks including, but not limited to: adoption credit, earned income credit, child and dependent credit, and traditional IRA deductions. It may mean a bigger tax refund and having a lower tax liability for the couple (offering IRS tax relief) – and it is usually the more financially advantageous choice. However, there are some instances where it is advantageous and even suitable to file separately. There is such a thing as the “joint and several liabilities where a spouse can be held liable for their spouse’s past financial actions. In such a case, this is where an “Innocent Spouse Relief” would come in handy when a spouse fails to adequately report income. To qualify, the IRS requires meeting all of the following requirements:

  • The individual filed a joint return that had an understatement of tax (deficiency) that’s solely attributed to the spouse’s erroneous items. Erroneous items include income received by the spouse but omitted from the return, as well as incorrectly reported credits, deductions, and property.
  • The individual establishes at the time they signed the return that they didn’t know about the errors and had no reason to know that there was an understatement of tax.
  • Considering facts and circumstances, it would be unfair to hold the spouse liable for the understatement of tax.

This is a legal situation that is best sorted out by consulting with a tax consultant.

On the other hand, there are also advantages to filing separately, where the individual and their spouse can choose to file on their income and assets separately. It means that the individual is considered single by the IRS and can qualify for Head of Household status. It will result in lower returns and filing separately, meaning that they are ineligible for several IRS assistance measures like deductions, credits, and exemptions that a couple filing jointly would qualify for. However, this status is a good protective measure for tax relief when the spouse has unpaid taxes, excessive student loan payments, and are high-income earners.