Tax filing deadline is fast approaching–it falls on Monday, April 18, 2022. For divorcing spouses, this means deciding whether to file as Married – Filing Jointly, or Married – Filing Separately.
Although it is not required by law, for the vast majority of legally wed people, it is typically extremely advantageous to file tax returns together. The IRS has established several tax deductions and credits for the benefit of married couples. Filing a return together is especially useful for couples where one spouse earns significantly more than the other. Spouses who file jointly qualify for numerous tax credits, including:
To be eligible to file jointly, a couple need not have been wed at the beginning of the tax filing year in question–the marriage just needs to have taken place on or before December 31. Keep in mind that both spouses are legally responsible for the veracity of their joint tax return. If one person underreports income or overstates a deduction, both will be liable for back taxes, penalties and interest, unless the one who did not report erroneous information can prove they did not know it was false. Often a divorce decree will address this issue for previously filed joint returns for couples who are already divorced.
Whether filing jointly or separately, married people are allowed an additional standard deduction. It is $1,350 per person for 2021 and $1,400 for 2022.
Usually, if spouses choose to file separately, they will each face higher tax rates and pay more combined total tax. In 2021, taxpayers who are married filing separately will receive a standard deduction of $12,550, whereas those who file jointly get to take a $25,100 deduction. Separate filers are ineligible for most of the tax breaks listed above. The maximum annual IRA contribution limit is higher for joint filers, too.
Sometimes, however, it makes good financial sense to submit separate returns. This may be the case for:
If one spouse has incurred significant medical expenses during the tax year, they may want to file separately to deduct it. People may deduct expenses that exceed 7.5% of their adjusted gross income (AGI). If their AGI is $60,000, then you can claim the deduction for the amount of medical expenses that exceed $4,500. All deductions must be backed up with receipts for treatment, prescriptions, copays, equipment, and so forth.
If both spouses are itemizing, they must agree who will claim which deduction, keeping them separate to avoid “double-dipping.”
There is no law which requires divorcing spouses to file together or to file in the most financially advantageous way. However, there is the possibility of relief in the final outcome of a divorce if one spouse’s separate tax filing harms the other spouse financially, or when it harms the marital estate overall. Courts in Missouri can consider tax decisions made by a divorcing spouse in the overall division of property so be careful of tax decisions made without the advice of your divorce attorney.
This is information only and not to be construed as tax or legal advice. Consult your accountant or tax professional for detailed advice on tax issues. Visit IRS.gov for more information.
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