Posted by The TaxAdvocate Group, LLC

Tips For Filing Your Taxes When You're Married

Tips For Filing Your Taxes When You're Married

The IRS does not require couples to file joint tax returns for the simple fact that they are married. Spouses have the option of filing separate marriage declarations, and some do so for various reasons.

Filing jointly usually offers more tax incentives but can also have negative results. Considering several factors can help you determine the right option for you and your spouse.


Married Filing Jointly

You and your spouse have the right to file a joint income tax return if you are considered legally married on December 31, the last day of the tax year. You can file a 2020 joint return in 2021 if you were legally married on December 31, 2020.

You'll be eligible for a higher standard deduction if you show up with your spouse, and the tax brackets for married filing jointly are even more generous. Married taxpayers who file separate returns are not eligible for certain tax exemptions but are only responsible for the accuracy of the information on the bank statements and for paying any taxes due on the statements.

The tax rules and provisions relating to the submission of joint declarations of marriage apply to same-sex spouses and opposite-sex spouses but not to registered domestic partners.


Rules for filing a joint return

"Legal marriage" is the common term here and is subject to personal interpretation. According to the IRS, you're married if you don't have a divorce or a court ruling by December 31, even if you filed for divorce last year. Your divorce must be completed on the last day of the year.

You cannot be legally separated by court order and file a joint return, even if you do not have to live with your spouse. You can live separately as long as the court has not issued an order regulating separation conditions.

A separation agreement between spouses is considered a contract and not a court decision as a legal separation. You can still submit a joint declaration if you have signed a separation agreement.

You and your spouse must also agree to submit a joint return, and both of you must sign it.


Marriage filing jointly affects your standard deduction.

Taxpayers can choose to either itemize their deductions or claim the standard deduction but cannot do both. This rule applies to all taxpayers.

The standard deduction for married filing jointly status is the highest available. As of fiscal 2020, the return you would file in 2021, the standard deductions are: 

  • $ 12,400 for individuals

  • $ 12,400 for married filing separately 

  • $ 18,650 for the head of households

  • $ 24,800 for married filing jointly

  • $ 24,800 for qualifying widow(er)s

These numbers are indexed to inflation, so they tend to increase slightly from year to year.


Single vs. Married filing tax rate

The taxpayer's declaration status also determines the tax brackets, and the table of tax rates be used. These brackets for married taxpayers filing a joint return for 2020 apply to the return that you would file this year 2021.

The tax rates and brackets for married filing separately are the same as for individuals. These brackets apply to the different taxpayers in 2020, the return you will file in 2021:

Rate for Married Filing Jointly

Rates for Married filing Separately 

10%

$ 0 to $ 19,750

10%

$ 9,875

12 %

$ 19,751 to $ 80,250

12%

$ 9,876 to $ 40,125

22%

$ 80,251 to $ 171,050

22%

$ 40,126 to $ 85,525

24%

$ 171,051 to $ 326,600

24%

$ 85,526 to $ 163,300

32%

$ 326,601 to $ 414,700

32%

$ 163,301 to $ 207,350


35%

$ 414,701 to $ 622,050

35%

$ 207,351 to $ 518,400

37%

$ 622,051 or more


37%

$518,401 or more

Note: These income brackets covered by each tax bracket are also indexed to inflation.

These are progressive or "marginal" tax rates. A higher percentage is not activated until your income has reached that specific income limit, so only your income above that limit is taxed on that percentage. For example, the first $ 19,750 would be taxed at 10%, and only an additional dollar would be taxed at 12% if you and your spouse earned $9,751 in 2020.


Risks associated with filing a joint married return

It might seem like a no brainer to choose the married filing jointly status, given the standard tax and deduction limits, but joint-filing has some drawbacks. Both spouses must report all income, deductions, and credits on the same return when submitting a joint return. Both assume full responsibility for the accuracy and completeness of this information. The IRS refers to it as being "jointly and severally liable."

Each spouse is responsible for providing documentation to prove the tax return's accuracy if verified by the IRS. Each is personally responsible for full payment if the taxes due are not paid. The IRS does not share the 50/50 tax debt between them.

However, the IRS recognizes that not all marriages are perfect. It sometimes grants exemptions from joint and several liabilities through an innocent spouse exemption, equitable relief, or separation of liability, depending on personal circumstances.

The rules for these exemptions are complicated, so consult a tax professional for help if you are in this situation.


Married filing separately

The filing of a separate married return provides an exemption from joint and several liabilities. Each spouse is solely responsible for the separate income tax return's accuracy and for paying any separate tax liability associated with that return. But married taxpayers who intend to file a separate return lose their eligibility for certain tax deductions and credits and, therefore, may end up paying more taxes.

However, filing a separate return can be useful in certain situations:

  • One spouse is unwilling or unable to consent to file a joint tax return.

  • One spouse knows or suspects that the other is omitting earnings or exaggerating deductions. The innocent spouse does not want to be held personally responsible for the other spouse's taxes or embezzlement.

  • Spouses live separately or are separated but have not yet divorced. They want to keep their finances as separate as possible.

  • The spouses live separately, and at least one of them would be entitled to the head of the household's status if they did not file together.

  • When you and your spouse combine the taxes owed on separate tax returns, the total is the same or very close to the tax that would be due on a joint tax return. In such a case, the separate filing serves to maintain separate responsibility for the accuracy of returns and payment of taxes, but without any additional liability.


Same-sex couples

Same-sex couples can file joint tax returns using the married filing jointly status or file separate tax returns using the married filing separately status. But taxpayers who are in a civil union or registered domestic partnerships are not considered married under federal law, so they must file returns using the status of single or head of household.

The IRS has indicated that the relationship should be recognized as a marriage according to the couple's state laws.


Bottom Line

Experts recommend preparing your return using both methods to determine which option is best for you financially. Personal issues should also be considered if you are not sure your marriage has a solid foundation or trust your partner to the point of filing jointly, so consider consulting a tax expert like The TaxAdvocate group, LLC., to be sure what is right for you.


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