The tax filing status you choose for the prior year depends on your marital status as of December 31 of the tax year in question. If you’re married, you have the option to either file jointly or use the “married filing separate” status for separate returns.
Let’s take a closer look at what you should know about marriage and taxes in Jamestown, ND.
Pros and cons of filing jointly
The vast majority of married couples will file their tax returns jointly. The biggest reason for this is that it’s much simpler to do it that way, and most people don’t want to make their taxes any more difficult than they need to be. A married couple filing jointly only needs to prepare and submit a single Form 1040, and you don’t have to separate your incomes, deductions and tax credit items—you can put them all into the same return. This makes life much easier for you when preparing your tax return.
The other big benefit of filing jointly is that it is also cheaper to do so. You only need to pay your tax preparation specialist to prepare one form rather than two, or if you’re submitting your taxes yourself, you only need to pay the fee for the one set of taxes. In addition, using married filing separate status can remove your eligibility for some very valuable tax breaks, including the child care tax credit and the higher education credits, which would potentially result in a larger combined tax bill than you’d have if you filed jointly.
That being said, there are some situations in which filing a joint tax return might not be in your best interest. The big potential pitfall to consider here is that both parties in a joint tax return are equally liable for any interest, penalties or underpayments that are levied as a result of errors, omissions or tax fraud. This means the IRS can come after you, even if the issues it discovered were not your fault, and even if you’re now divorced but the fraud was from a previous year.
You can seek to prove you did not know about your spouse’s indiscretions on their tax paperwork, or that you did not personally benefit. This would allow you to claim an exemption from that joint liability rule that exists when filing jointly. However, this is much easier said than done, and takes the work of a highly skilled attorney or accountant to be able to accomplish.
If you file separately, then you do not have to worry about any liability for tax-related misdeeds committed by your spouse. So, if you have any doubts at all about your spouse’s ability to pay taxes or their willingness to be financially ethical, a separate return can be a good plan.
For more information about what you should know about filing taxes after marriage in Jamestown, ND, we encourage you to contact the team of experienced professionals at the office of Craig S. Hanson, CPA today.