Do I File Jointly if I’m Divorced or Separated During the Year?

Do I File Jointly if I’m Divorced or Separated During the Year?

When you get married or divorced, it affects your income tax filing status, for better or worse. Not only are the rates different for different filing statuses, but the standard deduction that you can claim in lieu of itemizing deductions is different as well. And by filing jointly, you make yourself responsible for all the taxes on that return, not just your share.

If you are going through divorce, your filing status depends on whether you are still married at the end of the tax year. If you are, then you and your spouse can agree to file jointly, or you can file as head of household if you qualify (more about that later). If the divorce is final before the end of the year, then you file as single (or head of household if you qualify) even though you were married for some portion of that year.

What are the advantages of filing jointly?

In most cases, you pay less tax by filing jointly rather that separately. If you use the married filing separately status, there are certain tax breaks that may be limited.  On a married filing separately return you’ll be ineligible for education tax credits, student loan interest deductions, child and dependent care credit and the adoption credit, to name just a few.

But remember, when you file jointly with your spouse, both of you are responsible for the entire tax bill. So file jointly only if you are confident that any taxes due will be paid in full.

What are the advantages of filing as head of household?

If you qualify to file as head of household, you will get a larger standard deduction and pay taxes at a lower rate than you would if you filed as single. So what must you do to qualify for head of household status? It depends of whether you are married or divorced at the end of the year. If you are divorced, you may file as head of household if you pay more than half the costs of a home in which your child lives with you for more than half the year. Even if you are not yet divorced, you may qualify as head of household if you and your spouse live apart the last six months of the year. This generally results in a lower tax liability than the Married Filing Separately filing status.

If we file separately, how do we allocate income and deductions between us?

How you allocate your income and deductions depends on whether you live in a community property state, such Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. In a community property state. you and your spouse must each claim half of the income earned during the marriage and the deductions paid jointly. In other states, each of you claims the income you actually earned and the deductions you actually paid.

What if a joint return is audited, and it turns out my spouse cheated on our taxes?

If you filed a joint tax return and additional taxes and penalties are later imposed because your spouse omitted income or overstated deductions, you may not be liable for those taxes under the innocent spouse rules, as long as you did not know about the understatement when you signed the return.

To determine whether filing jointly or separately is best for you, you can use TurboTax to run “what if” tax computations, changing the filing status to see what taxes would be due either way.  You can also use the free TurboTax TaxCaster tool to get an estimate of your tax situation under each scenario.