IS IT BETTER TO FILE SEPARATELY OR JOINTLY WHEN MARRIED?
Under the tax laws, if you are legally married, when filing your tax returns, you have a choice of filing jointly with your spouse, or filing separately. The tax laws generally expect married couples to file jointly though they may legally elect to file separately.
Most times, it is more to the advantage of the filing couple to file jointly. Where married taxpayers file separately, most deductions and exemptions are generally halved for each tax return. In rare cases, married taxpayers may be able to file separately and claim higher deductions and get bigger refunds on their returns.
However, in a number of instances where a married taxpayer files separately from his/her spouse, the tax laws will entirely deny both taxpayers (since both must either file together or file separately) or significantly limit the extent of a number of deductions and exemptions.
Perhaps one key area where whether filing separately or jointly makes a difference is often in the instance where the spouses file jointly and they are both held liable for all errors and misstatements on the joint tax return. In such cases, both spouses are generally held jointly and severally liable for the liabilities that ensue. This is extremely critical because the liabilities may be criminal.
In very rare cases, where one spouse truly had very little to do with the preparation of the return, such spouse may ask the IRS to so excuse the spouse from the liability under the “Innocent Spouse Relief” rule. This rule essentially says that the spouse making the application should not be liable for the penalties or liabilities because the spouse was substantially unaware of the contents of the return and played almost no role in preparing the return.
The standard for granting Innocent Spouse Relief is very tight and it is very seldom granted. Determinations of such application are generally based on the totality of the facts and circumstances surrounding the case and the relief will be granted if it is deemed inequitable to hold the innocent spouse liable for the errors of the other spouse.
