| The most advantageous way for married people to | | | | does not have to assume full responsibility for the |
| file their income taxes is married filing jointly (MFJ). | | | | liability of the other. Remember though, that community |
| There are, however, circumstances involving state | | | | property states will typically consider all property and |
| taxes or large medical expenses, where a married | | | | income, not specifically identified as separate, to be |
| filing separately (MFS) tax status has a financial | | | | "community"-owned. A spouse filing separately reports |
| advantage. If you are legally married as of December | | | | all income including their portion of the |
| 31 of the tax year, the Internal Revenue Service would | | | | community-property income that arises from their |
| prefer you file jointly to simplify reporting and | | | | marriage. Furthermore, any unearned income arising |
| compliance issues. There are, thus, more | | | | from community-owned property, such as interest |
| disadvantages to MFS than advantages. The best | | | | income, is similarly divided between the two spouses. |
| way to determine whether or not to file as one or the | | | | The community property states are Arizona, California, |
| other is to actually calculate your tax return using the | | | | Idaho, Louisiana, Nevada, New Mexico, Texas, |
| two different filing statuses and compare the final | | | | Washington, and Wisconsin. These states may also |
| balances owed (or refunds due). If you are married | | | | differ in their treatment of spousal liability. For example, |
| and are contemplating filing separately, seek | | | | California currently provides for "innocent spousal relief" |
| professional advice before you prepare your income | | | | but not relief for an "injured" spouse in tax liability |
| tax returns. | | | | issues. Remember too, that dependents can only be |
| Consider the few advantages a legally married couple | | | | claimed once; just because you might be filing |
| might have filing their income taxes separately. If a | | | | separately doesn't mean you can both claim the same |
| spouse has lived away from a "main home" for more | | | | child or split a dependent in half! |
| than six months, the spouse in the home with a | | | | There are distinct disadvantages to filing separately. If |
| dependent can alternatively file Head of Household. | | | | you are married but file separately, you cannot take |
| Another consideration is that special debts that could | | | | tax credits associated with adoption, education, child |
| trigger an income tax refund offset, such as child | | | | and dependent care nor earned income. You and your |
| support or outstanding student loans, will only affect | | | | spouse must choose the same deduction method; |
| the return of the spouse who incurred the debt. Yet | | | | whether itemized or standard. If you file separately but |
| another special situation could arise with medical and | | | | actually live together there are additional restrictions; |
| dental expenses that are deductible only if they | | | | you cannot claim passive loss from rental property, roll |
| exceed a 7.5% threshold of the tax payer's adjusted | | | | over certain retirement accounts, claim tax credits for |
| gross income (AGI). Separation of incomes may | | | | the elderly or disabled, or calculate taxable social |
| provide an advantage to a spouse with large medical | | | | security at a lower, more advantageous rate. Calculate |
| expenses and a lower AGI. | | | | your taxes and compare the bottom lines; it's a |
| Since incomes are reported separately, one spouse | | | | question of money! |