Married filing joint or married filing separately – it is the decision that every married couple must make each tax year. And, with the nationwide legalization of same-sex marriages last year, there will be more couples than ever deciding how to file. So how, exactly, do you decide which option is right for you and your spouse? It really all comes down to two things: protection and deductions.
When Filing Separately Might Be Better
Over the last few years, major changes to tax laws have eased marriage penalties and given taxpayers more incentive to file jointly. However, there are a number of situations in which couples may benefit more from filing separately. For example, those that are facing the possibility of divorce or separation may benefit more from filing separate 1040s to prevent any consequential tangles in the coming year.
Another situation in which separate filing might be best is if one partner uses questionable filing techniques. While the IRS does offer innocent spouse protection in some circumstances, the victimized spouse must be able to prove that they were unaware of any shady filing tactics. Failure to provide that proof makes both parties legally liable for the resulting tax bill in a joint tax return.
Lastly, couples may want to consider filing separate returns if one spouse has a low income but a lot of medical bills. As long as their adjusted gross income threshold meets or falls below 10 percent, the costs can be itemized and may potentially provide the affected spouse with a bigger tax break.
When Filing Jointly Might Be Better
Of course, filing separately can have quite a few drawbacks. Married and filing separately spouses face higher tax brackets sooner than unmarried taxpayers, and deduction flexibility is also often sacrificed, which can leave one spouse at the shorter end of the proverbial tax break stick.
Moreover, many tax-cutting deductions and credits - such as earned income tax credits, child or dependent care costs, student loan interest deductions, adoption expenses, and educational tax credits – are often forfeited by couples filing separately. For many that have children, this could be a big enough credit to make separate filing seem, at best, unappealing and counterproductive.
When Back Taxes Create Filing Issues for the Newly Married
When one spouse owes back taxes to the IRS, it can create a great deal of stress for newly married couples. That stress is often further compounded when tax season rolls around and the non-owing spouse realizes that they, too, could lose their tax return. There are, however, a number of strategies that can be used to protect any refund owed to the non-owing spouse. Moreover, there are ways to strategically work with the IRS to resolve back taxes for the spouse that is currently in debt.
The Law Offices of Eric Zelazny handle each case with a personal and creative touch. Serving Illinois residents since 1996, each creative solution is crafted to help you reach the best possible outcome and long-term solution. Take the first step in managing your IRS tax problems today by scheduling your free initial consultation with an experienced Cook County IRS tax attorney. Call 708-888-2299 today.