Should we file our taxes jointly?
Married couples have the option of filing their taxes either jointly or separately. Recent changes to the tax laws have encouraged joint filing by increasing the deduction offered to married couples filing jointly. Before automatically filing jointly, however, taxpayers should consult with a San Diego tax planning lawyer who can help them to assess whether filing jointly is best for them. The following is a look at some circumstances in which filing separately may be a better tax plan than joint filing:
If one spouse has significant medical bills and a low income, it may be beneficial to file separately. By filing separately, the spouse with the medical expenses might meet the ten percent adjusted gross income threshold needed to itemize medical expenses. This could lower your overall family tax burden.
Questionable Tax Filing Techniques
Spouses who are aware that their partner engages in questionable tax filing techniques could be wise to file separately. When a couple signs a joint return, each partner can be held liable for any tax bill or issues that later arise. The IRS does provide innocent spouse protection. If the innocent spouse can show that he or she was unaware of the tax scheme, liability is not shared. However, it can be difficult to meet this burden of proof and filing separately may provide you with more protection.
Couples who are on the verge of divorce often elect to start filing separately even before the divorce is filed. This can prevent you from becoming entangled in tax issues after the marriage has ended.
Drawbacks to Separate Filing
Individuals who are married but filing separately may be taxed at higher brackets sooner than unmarried tax filers. They may experience less flexibility in taking deductions. If one spouse itemizes his or her deductions, the other must as well, which could mean the spouse with fewer deductions ends up being penalized. Additionally, married couples filing separately could lose out on certain tax credits and deductions. It is important to consult with a tax planning attorney early on to evaluate your best filing option.