The primary consideration to take into account when determining the type of filing you will make is your marital status on December 31st. If you are married on this day under your state’s law, then you are considered married for the entirety of that year. If you are divorced or legally separated under state law on that day, then you are deemed to have been unmarried for the rest of that year.
As an unmarried person, you may file as single or Head of Household if you can claim a qualified dependent. You may also file under the Head of Household status if you have been separated from your spouse longer than 6 months and are also eligible to claim a qualified dependent.
If you are married, you may file separately or jointly. For most couples, a joint filing will allow for more tax savings than would otherwise be realized if both spouses should choose to file separately. However, this may not be the case for everyone, and it would be beneficial to ask your tax preparer to compare your liability or refund under both options. Even if you are in the process of divorce, if you have not received a final divorce decree by December 31, you may still file jointly and take advantage of the tax savings if you would prefer to do so.
Pros of Filing Jointly
As mentioned above, the tax code allows for couples to file jointly.
When filing married filing jointly, both spouses report their income. Many couples choose to file jointly to take advantage of the additional credits and deductions that are available to joint filers. For example, couples who file a joint return qualify for a much larger standard deduction than those who file separately; $24,400 compared to $12,200 for those who opt to file alone.
Aside from the deductions and credits available, joint filers may also qualify for a lower tax bracket. This typically applies to couples with a financial situation where one spouse earns significantly more than the other. Unfortunately, this type of financial situation sometimes involves spouses who do not completely understand the implications of signing a joint return.
Cons of Filing Jointly
While there are certainly many reasons why a couple may find it advantageous to file together, there are consequences worth considering beforehand. The fact is, filing jointly means both parties assume each other's tax liability. Therefore, if you choose to file as married filing jointly your spouse will be responsible for any tax, penalties, and interest that arises from that joint tax return, even if you reported no income on the return. The section below titled “Joint and Several Liability” offers a clearer understanding of what you may personally be responsible for under a married filing jointly tax return. However, there are exceptions made for certain individuals who it would not be fair for the IRS to go after for a spouse’s error. If you do not believe it is fair that you should pay for a tax liability that your spouse or former spouse incurred; read on to see if you potentially qualify for an exemption under the Innocent Spouse Relief provision of the tax code.