Filing a Joint Tax Return: What Does Married Filing Jointly Mean?
Filing a joint tax return allows married taxpayers to enjoy favorable tax rates. In other words, the total tax is usually lower on a tax return filed with the status of married filing jointly (MFJ). The other types of filing status are single, married filing separately (MFS) or head of household (HOH).
What does married filing jointly mean? Generally, it means lower taxes that come with greater responsibilities.
Example of Married Filing Separately vs Jointly
For example, the following summary shows the tax on $100,000 of taxable income in 2023, depending on tax return filing status. This calculation assumes that the taxpayer takes the standard deduction (does not itemize).
- Single – $14,768
- Married Filing Jointly (MFJ) – $8,481
- Married Filing Separately (MFS) – $14,768
- Head of Household (HOH) – $11,849
You can see from this example that a married couple filing a joint tax return pays much less tax than taxpayers who are single, married filing separately or head of household. In other words, with MFJ, the tax bill is lower or the tax refund is higher.
CPA Tax Tip: This calculation does not include state taxes, which vary by state. Ask your CPA to run a tax projection or tax calculation at your income level, considering the implications of the state in which you live. This will show you the advantages and disadvantages of married filing separately, based on your specific fact pattern.
Who May File a Joint Tax Return?
Taxpayers may file a joint tax return if they are married on the last day of the year.
- Taxpayers who live together in a common-law marriage recognized by the state where the marriage began. Common-law states: Alabama, Colorado, District of Columbia, Iowa, Kansas, Montana, Oklahoma, Pennsylvania, Rhode Island, South Carolina and Texas.
- Taxpayers who live apart but are not legally separated
- Taxpayers whose spouses died during the year and who have not remarried
Taxpayers who are not married, divorced or legally separated on December 31 may not filed a joint tax return.
Tax return filing status is selected by checking off the appropriate box at the top of the first page of a federal income tax return. Both spouses must sign the tax return when filing jointly.
Only one tax return is required for the married couple. This means less time preparing tax returns. Or if you use a CPA to prepare your taxes, lower professional fees.
Joint Tax Return and Joint Tax Liability
The lower taxes on a joint tax return comes with a significant cost. Spouses who file a joint tax return have joint and several liability for the tax on their returns. This is a significant responsibility. It means that the IRS may collect the entire tax from either spouse, even after a divorce. It does not matter which spouse earned the money.
Joint liability is a significant responsibility for both spouses. They should be aware of this when signing a joint tax return.
When to Consider Married Filing Separately
While filing a joint return usually results in less tax for a married couple, married filing separately (MFS) can be beneficial in some cases. For example, if one spouse has significant miscellaneous deductions or medical expenses, filing separately may result in a lower tax bill or a higher tax refund.
Married filing separately (MFS) should also be considered when one spouse does not wish to accept joint liability for the taxes of the other spouse.
There may also be non-tax reason to file separately. For example, it may be better to file separately when applying for a need-based loan.
CPA Tax Tip: Ask your CPA to run your tax return both as MFJ and MFS, to see which status gives you the best result. The Tax Department at our firm does this all time for our clients and it is very useful at tax preparation time.
Tax Filing Status and Amended Tax Returns
Spouses have the option to use married filing separately (MFS) status and then amend the return later to file a joint return (MFJ). This can be beneficial if one of the spouses is undecided about filing jointly.
However, this strategy does not work the other way around. Spouses may not amend a joint return at a later date in order to file two separate returns and thereby avoid joint liability.
Divorce, the IRS and Joint Tax Liability
Divorce decrees sometimes stipulate that a particular spouse is liable for the tax liability on a joint return. However, the IRS is not bound by this stipulation. The spouses remain jointly liable for the tax, despite what the divorce decree says. However, the spouses do have the option to sue each other in court for the taxes on the return.
The IRS and the courts will ask if the couple intended to file a joint return. A signed return shows proof of intent. This can be a signed paper return (the type we mail at the post office) or signatures on Form 8879, the authorization form to e-file a tax return.
What Qualifies as a Signed Tax Return?
One of the most challenging issue on the topic of joint returns is whether or not a return is even considered to be jointly filed. This matter comes up when one spouse wants to avoid joint liability for the taxes.
One spouse may claim that their signature on the return was forged or otherwise missing, thereby invalidating a joint tax filing. These issues often end up in court.
When one spouse argues that their signature on a tax return was forged, the IRS looks to see if there was express consent. This refers to the situation where one spouse expressly authorized the other spouse to sign the return. This will be considered to be a valid joint return, with joint tax liability for both spouses.
In addition, the IRS and the courts also look for tacit consent. This refers to the situation where one spouse agrees to the filing of a joint return without actually saying so. Returns filed with tacit consent are deemed to be valid joint returns. Examples of tacit consent include:
- A couple has been filing joint tax returns for many years without both signatures.
- The objecting spouse earned income and must have known that a return was required even if they never signed it or their signature was forged.
- A spouse participated in the preparation of the returns.
- A couple wanted the return filed for a non-tax reason, such as a mortgage application.
Tax Returns Signed Under Duress
Lastly, returns signed under duress are not valid returns. However, a spouse has to pass difficult tests to prove duress. They have to prove that they were unable to resist the demands to sign the return. And, they have to prove that they would not have signed the return had they not been forced to do so.
Separation of Liability Relief: Innocent Spouse
There are two separation of liability relief exceptions to the rule of joint liability when a tax return is filed jointly. The first exception allows a spouse to petition the IRS for innocent spouse relief. Innocent spouse relief may be available in the following situations:
- The innocent spouse claims that he or she did not know, or had no reason to know, about unreported taxable income and should be not held liable for the tax.
- The innocent spouse argues that it would be inequitable to hold him or her liable for the tax.
Separation of Liability Relief: Injured Spouse
The second separation of liability exception is called injured spouse relief. This allows a spouse to petition the IRS when a portion of a tax refund on a jointly filed tax return is withheld by the government to pay a liability of one of the spouses relating to the time before their marriage. This can happen, for example, in cases of debts to federal agencies or unpaid child support.
Marriage-Related Tax Matters
Tax issues related to marriage and divorce are complicated and highly sensitive. We recommend working with an experience CPA who can handle these problems, including innocent spouse claims.
Massey and Company CPA is a boutique tax and accounting firm serving individuals, small businesses and non-profits in Atlanta, Chicago and throughout the country. Our Tax Department provides tax return preparation, tax planning, IRS tax problem resolution and IRS audit services. Our Accounting Department provides small business accounting and bookkeeping services using QuickBooks Online.
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