Most married taxpayers know that they have the option to file jointly or separately for tax filing. The Federal income tax system prods taxpayers toward joint filing. This results in the loss of certain deductions and credits. Also, the inclusion of Social Security benefits is taxable income for those who file separately. Assuming you are better off filing a Federal joint return, when might you consider filing separately? Here are three scenarios for tax filing:
Different Residency Periods
If a taxpayer and spouse are part-year Massachusetts residents and they had different residency periods, they have to file separately on their Massachusetts return. For example, John moves to Massachusetts from Texas in February. He moved due to a new job as a snow plow operator. Marsha remains in their old state to finish out the school year with the kids. She does not move to Massachusetts until July. They are required to file separate Massachusetts tax returns. Note, they are better off in this case, since Marsha’s Texas income will be excluded from taxation in Massachusetts for her tax filing.
If a taxpayer has certain unpaid debts, they may opt to file separately. If a taxpayer is in arrears with student loans, back taxes, or child support, their spouse may benefit from filing separately. Your refund can be garnished by various government authorities, and if there is a nominal difference in tax liability, Married Filing Separately (MFS) may be the way to go. Also, if one spouse expects a tax balance in the current year, Married Filing Separately can be appropriate. For example, John and Marsha are filing a joint return. Marsha had some unemployment income and had no tax withheld. They do not expect any Federal tax liability. However, they do expect to owe Massachusetts. They can file separately on Massachusetts only so John is not liable for the taxes owed on Marsha’s unemployment income.
If your husband is Vito Corleone, our official advice is, file separately. Oh, and never ask him about his business. If a spouse has questionable business practices, that taxpayer can file separately. This shields them form the associated tax risks.
By the way, If you are stuck at home for Snowpocalypse 3.0, Vito makes for a good trilogy read.
Questions About Tax Filing?
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