What Married Filing Separately on Your Tax Return May Mean for Your Finances and Marriage

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by | Mar 4, 2022 | Blog

With tax season well in gear, married couples have a choice to make. Should they file their tax return jointly or separately? Generally, a joint return is better financially, but there are exceptions where a couple would pay less taxes by filing separately. One spouse may also prefer to file his or her own separate tax return for non-financial reasons. Either way, it’s important to your marriage to discuss with a tax professional how best to file your tax returns.

Married couples filing jointly will, as a general rule, have lower tax rates than if they file separately. However, it may make sense to file separately if there is a large income disparity between the spouses and the lesser-earning spouse would be taxed at a significantly lower rate. 

Spouses who choose to file taxes separately without verifying the financial consequences, may be making a mistake on both the financial and marital fronts. Putting aside the increased tax obligation factor, which may result from your spouse being misinformed, there is also the risk that your spouse is trying to hide something including concealing income or inflating expenses. Detailed conversations about your finances, including your tax returns, are of particular importance because, if you are filing jointly, any liabilities that arise will be the responsibility of both you and your spouse – jointly and severally. That means you could be stuck paying the taxing authority 100% of the amount owed if it is easier for them to get paid from you as opposed to your spouse. Thus, if your spouse claims it’s better to file separately, be sure to confirm that claim with a tax professional. And if something is seriously awry, it may also be time to speak with an attorney.

Married couples should always be fully transparent with each other about their finances. It’s a matter of trust. While it is common for one spouse to be responsible for the finances, you cannot, nor should you cede all financial control to your spouse. If you do and that control is misused, you could have serious problems to contend with both in the marital and financial arena. To be clear, understanding your finances can give you advance warning of potential problems in your marriage. 

In the end, it is always best to talk to a tax professional for advice on your specific situation particularly if that situation changes annually or every few years. To the extent there is no justification for filing separately yet your spouse insists or otherwise behaves suspiciously, consider speaking with an attorney. 

If you are in this situation, contact us to discuss next steps. We can advise you regarding your legal rights and recommend financial experts to assist you in investigating a potential problem.

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