Every year, my married clients ask me if they should file a joint return or file separately. The best option is generally to file a joint return. Of course you have to BE legally married. For tax purposes, you are considered married if you were married on the last day of the year, even if your divorce has not been finalized. Joint filing status is not permitted to couples in civil unions or deomestic partnerships. The Supreme Court ruled that married, same-sex couples must file their federal taxes jointly or as married couple filing separately, as single status is not an option,. As long as you are legally married anywhere in the world, how do you decide? The tax rates for MFS are higher at lower income levels. MFS reduces or eliminates potential tax credits that are deduced from your tax liability. You can't take the Earned Income Tax Credit, (EITC), the Elderly or Disabled Credit, or the education credits. For the Child tax Credit, the maximum credit is $2,000 per child. Your income can't be higher than $400,000 when filing a joint return. If your joint income is over $400,000 and one spouse's income is below $200,000, MFS may mean you can clam more of the credit. MFS cuts your Alternative Minimum TAX (AMT) exemption in half and makes it more likely that you may have to pay AMT. More of Social Security benefits are taxable when you file separately. I won't get into community property issues as Florida is NOT a community property state. Also keep in mind that once you sign a joint return, both spouses are responsible for the tax liability due.
If you are undecided, I can do a trial run both ways.
If you have questions on this topic or anything else, give be a call or drop me an email.
MaryAnn Schoolden, CPA