Being Married and Filing Taxes
The Pros and Cons of Filing a Joint Married Return
The Internal Revenue Service doesn't force married couples to file joint income tax returns simply because they've tied the knot. They have the option of filing separate married returns, but filing jointly usually provides more in the way of tax relief.
According to the IRS, "If you and your spouse decide to file a joint return, your tax may be lower than your combined tax for the other filing statuses. Also, your standard deduction (if you do not itemize deductions) may be higher, and you may qualify for tax benefits that do not apply to other filing statuses."
If you're unsure what's best for your personal situation, experts recommend preparing your taxes both ways to determine which option makes the most financial sense for you. You might also want to keep a few rules in mind.
When Can You File a Joint Return With Your Spouse?
You're eligible to file a joint tax return if you're considered legally married. This means that you were married on the last day of the tax year. Even if you filed for divorce during the year, the IRS still considers you married if you don't receive a divorce decree or judgment on or before December 31.
That's the basic rule. You can't be legally separated by court order, either, although it's not mandatory that you live together. You can simply live apart without having the court issue an order dictating the terms of your separation.
Both you and your spouse must also agree to file the joint return and you both must sign it.
How Married Filing Jointly Impacts Your Tax Rate
A person's filing status determines which standard deduction amount and which schedule of tax rates are used. These are the rates and brackets for the married filing joint status in the 2017 and 2018 tax years.
2017 Tax Rates
|10%||$0 to $18,650|
|15%||$18,651 to $75,900|
|25%||$75,901 to $153,100|
|28%||$153,101 to $233,350|
|33%||$233,351 to $416,700|
|35%||$416,701 to $470,700|
|39.6%||$470,701 and above|
|10%||$0 to $19,050|
|12%||$19,051 to $77,400|
|22%||$77,401 to $165,000|
|24%||$165,001 to $315,000|
|32%||$315,001 to $400,000|
|35%||$400,001 to $600,000|
|37%||$600,001 and above|
These are progressive or marginal tax rates. This means that a higher percentage doesn't kick in until your income reaches that threshold, and then only your income over that threshold is taxed at that percentage. For example, if you and your spouse earned $19,051 in 2018, the first $19,050 would be taxed at 10 percent and only that one extra dollar would be taxed at 12 percent.
The Risks of Filing a Joint Married Return
Both spouses must report all their incomes, deductions, and credits on the same return when they file jointly. Both accept full responsibility for the accuracy and completeness of that information.
So what happens if there are errors? Each spouse is responsible for providing documentation to prove the accuracy of the tax return if it's audited by the IRS. In other words, each spouse is held jointly and severally liable for those mistakes. And if any tax that's due and owing is unpaid, each spouse is held personally responsible for the entire payment.
Here's what the IRS has to say about it: "Both of you may be held responsible, jointly and individually, for the tax and any interest or penalty due on your joint return. This means that if one spouse does not pay the tax due, the other may have to. Or, if one spouse does not report the correct tax, both spouses may be responsible for any additional taxes assessed by the IRS. One spouse may be held responsible for all the tax due even if all the income was earned by the other spouse."
The IRS recognizes that not all marriages are perfect unions and will sometimes grant exceptions for joint liability through innocent spouse relief, separation of liability, or equitable relief, depending on the circumstances of the matter. But the rules are complicated so see a tax professional for help if you find yourself in this predicament.
Filing a Separate Married Return
Filing a separate return provides relief from joint liability for taxes. Each spouse is only responsible for the accuracy of his or her own separate tax return and for the payment of any separate tax liability associated with it. But married taxpayers who file separately lose their eligibility for quite a few tax deductions and credits, and they often pay higher tax rates.
By the same token, filing separately can be advantageous in a few situations:
- When you and your spouse combine the taxes due on your separate tax returns, the total is the same as or very close to the tax that would be due on a joint return. In this case, filing separately achieves the goal of maintaining separate responsibility for the accuracy of the returns and the payment of tax but without any additional liability.
- One spouse is unwilling or unable to consent to file a joint tax return.
- One spouse knows or suspects that the other spouse is omitting income or overstating deductions, and that spouse does not want to be held personally responsible for the other spouse's tax.
- The spouses live apart or are separated but not yet divorced. They want to keep their finances as separate as possible.
- The spouses live apart so at least one spouse would qualify for head of household filing status if they didn't file together.
When One Spouse Is Deceased
You can still file a joint return with your spouse if she died during the tax year. According to the IRS, "If your spouse died during the year, you are considered married for the whole year and can choose married filing jointly as your filing status."
Going forward, you can file as a qualifying widow(er) for a limited period of time, as head of household, or as a single taxpayer. Different rules apply to each filing status and some of them can be complicated, so check with a tax professional to find out if you're eligible for qualifying widow(er) or head of household status or if you must file as a single taxpayer.
Same-Sex Married Couples
Same-sex married couples are allowed to file joint tax returns using the married filing jointly status, or they can file separate returns using the married filing separately status. But taxpayers who are in registered domestic partnerships or civil unions are not considered married, so they must file their returns using either the single or head of household filing status.
The IRS states in Revenue Ruling 2013-17, "For federal tax purposes, the terms 'spouse,' 'husband and wife,' 'husband' and 'wife' do not include individuals (whether of the opposite sex or the same sex) who have entered into a registered domestic partnership, civil union, or other similar formal relationship recognized under state law that is not denominated as a marriage under the laws of that state, and the term 'marriage' does not include such formal relationships."