The Internal Revenue Service recognizes five income tax filing statuses. Each filing status is determined, at least in part, by your marital status. You might qualify for more than one filing status. For example, if your are married, you have the option of filing your federal income tax using either the Married Filing Jointly or the Married Filing Separately filing status.
The IRS considers your marital state on of the last day of the year to be your marital state for the entire tax year. If you got married on December 31, the IRS considers you to have been married for the entire year. If your divorce decree was final as of December 31, the IRS considers you to have been single for the entire year. Therefore, you cannot file as married. You must use the Single filing status, or in some cases, you might be able to use the Head of Household status. If your divorce decree was final as of January 1, you cannot file as single for the previous tax year. You must file using either the Married Filing Jointly or Married Filing Separately status. In rare cases, you might be able to file using the Head of Household status.
Married Filing Jointly
Married couples have the option of filing a joint federal income tax return. You can file a joint return even if only one spouse had income. With a joint return, you combine both your incomes and your deductions, which usually results in a lower combined tax obligation than if you filed separate returns, according to the IRS. If both you and your spouse have income, the IRS recommends figuring your federal income tax return using both the Married Filing Jointly and Married Filling Separately filing statuses, and then filing your tax return using the status that provides you with the lowest combined tax obligation.
Married Filing Separately
Married couples have the option of filing separate returns, but both must file using the same filing status. One spouse cannot file a separate return while the other files a joint return. When you file using the Married Filing Separately filing status, you lose certain benefits. For example, you can't claim the earned income tax credit or the credit for child and dependent care expenses. You also can't deduct expenses for higher education or interest on your student loans. If your spouse itemizes deductions, you must also itemize your deductions. In most cases, you will pay higher combined income taxes by filing separate returns, according to the IRS.
Reasons to File Separately
If you file a joint return, both you and your spouse are jointly responsible for the taxes, even if only one of you had income. The IRS recommends filing separate returns when you want to be responsible for only your own taxes. Filing separate returns can provide an added layer of privacy. If one spouse is in the public eye and needs to make her tax returns public, the other spouse can keep his taxes private. Filing separate returns makes sense if each spouse's income is significantly different and the lower earning spouse had significant medical expenses, casualty losses or deductible miscellaneous expenses. If the marriage is on unstable ground and you fear it might end in divorce, it might be advantageous to file separate returns.
Mike Parker is a full-time writer, publisher and independent businessman. His background includes a career as an investments broker with such NYSE member firms as Edward Jones & Company, AG Edwards & Sons and Dean Witter. He helped launch DiscoverCard as one of the company's first merchant sales reps.