Married & filing separately? Maybe better to avoid it

A common question that is always asked by married clients, when their personal tax returns are being prepared, is “Should we file jointly, or separately?” Of course the tax practitioner/professional (such as us) would always be more than happy to do a comparison between filing jointly vs. filing separately, to see what difference it would create on the couple’s income tax liability. However, nine times out of ten, filing jointly tends to be a more favorable filing status, then filing separately, and here the reasons why filing separately should be avoided:

1. Married filing separately would put each spouse into higher income tax brackets, compared to filing jointly;
2. A taxpayer’s status would not able to get certain tax credits, such as
a. Any of the educational tax credits;
b. The refundable Earned Income Tax Credit;
c. The Child Tax Credit;
d. The Child and Dependent Care Tax Credit;
e. The Adoption Tax Credit
f. If one spouse decides to itemize his/her tax deductions, then the other must itemize his/her tax deductions; and
3. In community property states, such as California (the other eight community property states are Arizona, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin), it has been generally recognized that one half of a spouse’s income (including salaries & wages), is the other spouse’s income. Thusly, an allocation of income between the spouses must be made, if the couple decides to have their filing status as “married, filing separately”.

The classic reason that married filing separately would have to be used is when one of the spouses just simply leaves, without getting a divorce and/or a separate maintenance agreement, and does not have any children to claim as dependents, because the leaving spouse is still legally married (which eliminates him/her being single); he/she does not have any children as qualifying dependents (which eliminates him/her being head-of-household); and even though he/she could file as married filing jointly, but the other spouse would probably not consent to that.
So if you one of those couples who want us to see if either of these filing statuses, married filing separately or filing jointly, is best for you, please contact us at http://www.kayatax.com/contact-us, and we would more than happy to compare to see which one is best for you.