Question: I know there are certain advantages to filing a joint tax return with my spouse (married filing jointly) as the tax rate tends to be lower and the standard deduction tends to be higher than the filing status of married filing separate. If I were to file as married filing a joint return, am I liable for taxes that don’t get paid?
Answer: A significant concern for some taxpayers is that married couples who file a joint return have “joint and severable liability” for any tax due. This means that both spouses are equally liable for the income taxes owed and may be audited and/or prosecuted for tax fraud committed by either party. It does not matter to the IRS which spouse incurred the debt as the IRS can go after either party. One of the spouses could even be responsible for the entire tax debt even if the other spouse earned all of the income. Nonetheless, innocent spouse and other forms of relief are available, provided, that the taxpayer has the burden of proving that they qualify for it.
Comment: Taxpayers in high-income brackets and those with a lot of itemized deductions should do a comparison with the numbers for married filing separately to see which result provides a better outcome. It is important to note that after the due date for filing of the tax return, you cannot switch from married filing joint to married filing separate.
As always, if you have any questions or would like to learn more, please contact me at email@example.com or 301-575-0313.
ABOUT STEVE SHANE
Steve Shane provides strategic counseling to clients in need of estate administration, charitable giving and business continuity planning while minimizing estate, gift, and generation-skipping transfer tax exposure. He offers legal guidance to clients on asset protection and the proper disposition of assets in accordance with the client’s objectives, while employing tax planning techniques such as the use of irrevocable trusts, life insurance planning, lifetime gifts and charitable trust. He is also experienced with drafting documents for business planning, the incorporation and application for exemption for Private Foundations and the administration of decedents’ estates.
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