Why some married individuals may opt to file separately from a spouse

On Behalf of | Mar 29, 2016 | Tax Crimes

When many couples marry, they choose to include the phrases “for better or worse” and “for richer or poorer” in their wedding vows. Spouses who subsequently file joint tax returns often come to understand the full meaning of these promises as they are 100 percent liable for a spouse’s tax triumphs, mistakes and even crimes.

The Internal Revenue Service reports that an estimated 95 percent of married couples choose to file joint tax returns. On paper this makes sense as, according to TurboTax, married couples who file jointly are allowed a standard deduction of $12,600 versus the $6,300 that married couples who file separately are allowed to take. Additionally, married joint filers qualify for several tax credits including those related to child care, earned income and education.

Given the many benefits afforded to married couples who file joint tax returns, it’s no wonder that the vast majority of couples opt to go this route. However, in cases where one spouse fails to report income, commits tax fraud or racks up gambling or other surprise debts; an unsuspecting spouse is still held 100 percent liable for anything and everything that is included or intentionally omitted from a jointly-filed tax return.

This is true even in cases where a spouse may be a stay-at-home mom or dad and not earn income or pay taxes. As long as a spouse signs a joint tax return and a couple reaps the rewards that are afforded to couples who file jointly, that individual is on the hook for a husband’s or wife’s tax liabilities. In cases where a spouse has concerns about a husband’s or wife’s personal finances or believes that he or she plans to commit tax fraud, it’s wise to file as married but separate. Likewise, if an individual plans to file for divorce or believes that a spouse is planning to file for divorce, it may be wise to file a separate tax return.

Source: Forbes, “95% Of Married Couples File Taxes Jointly, Should You Join The Other 5%?,” Robert W. Wood, March 21, 2016