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When Does Married Filing Separately Make Sense?

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Married Filing SeparatelyAfter the wedding, I started taking a closer look at the tax numbers and incorrectly concluded that the only time someone would ever file as “married filing separately” would be if one partner earned a whole lot and one partner earned not as much. The logic was that the lower earner wouldn’t be subject to the same tax rates as the higher earner and thus the difference would overcome the different tax brackets. The only correct assumption I made was that the lower earner wouldn’t lose access to any tax advantaged accounts, like Roth IRAs, because they’d still be over the limits for those types of accounts. I already gave out my hypothesis and my result (I was wrong and am now clueless as to why anyone would file separately if both options were available) but here’s what I did.

Hypothesis: Married Filing Separately shares more of the lower tax brackets as Single filers but you lose practically all of the favorable tax benefits that Single filers enjoy. The benefit of filing separately is if you have a significant disparity in income with the sum total above many of the tax beneficial limits. (this hypothesis is proven wrong)

2008 Tax Brackets

The analysis was using 2008 brackets but you can see the current tax brackets here.

Tax Rate Single Married Filing Jointly Married Filing Separately
10% Not over $8,025 Not over $16,050 Not over $8,025
15% $8,025 – $32,550 $16,050 – $65,100 $8,025 – $32,550
25% $32,550 – $78,850 $65,100 – $131,450 $32,550 – $65,725
28% $78,850 – $164,550 $131,450 – $200,300 $65,725 – $100,150
33% $164,550 – $357,700 $200,300 – $357,700 $100,150 – $178,850
35% Over $357,700 Over $357,700 Over $178,850

Three Scenarios

What happens with a couple earning $100,000 with one earner taking in $80,000 and one earner taking in $20,000?

  • Married Filing Jointly: $17,687.50
  • Married Filing Separately: $16,772 + $2,197.5 = $18,969.50 (correction)

That’s a difference of $2,802.50 but both individuals lose access to a Roth IRA (among other significant benefits).

What about a couple earning $200,000 with one earner banking $120,000 and one banking $80,000 would pay (this doesn’t take into account deductions):

  • Married Filing Jointly: $44,744
  • Married Filing Separately: $28,964.50 + $16,772 = $45,736.50

What!? It’s more to file separately… maybe the disparity has to be greater. What if a couple earned $400,000 with one earner banking $320,000 and one banking $80,000?

  • Married Filing Jointly: $58,787
  • Married Filing Separately: $49,402.5 + $16,772 = $66,174.5

Two Potential Reasons to File Separately

So, I tried to do more research and discovered this great About.com article and according to William Perez, filing separately makes sense in two basic scenarios:

  1. “Filing separate returns makes the most sense when one spouse owes a significant amount of money, but the other spouse could get a refund.”
  2. “It also makes sense when one spouse is cheating on their taxes, and the other spouse doesn’t want to be involved.” (Nice!)

Let’s ignore scenario #2 because anyone who lets someone else knowingly cheat on taxes doesn’t really need to worry about their tax bill, they have bigger issues. With scenario 1, you have to be in such a small window, for both earners, such that the lower earner’s deductions will save them more than the higher earner loses by filing separately (as evidenced by our 80/20 example above). The 25% tax bracket starts at $32,550 for married filing separately but starts at $65,100 for married filing together! I suppose the numbers have to be in that range for this to make sense… but then you start giving up great benefits such as a Roth IRA, which is available if your total AGI is less than $156,000 when you file jointly but only $10,000 when you file separately! (plus, I don’t know if I’d classify someone earning $80,000 as someone who would owe a “significant amount of money,” hence my 120/80 and 320/80 examples)

Plus, if you read the article some more, there are so many headaches involved in filing separately (both have to take itemized or both take standard, state taxes are a pain in many states, etc.) that I can’t even imagine the strangely specific scenario in which filing separately truly makes both financial and psychological sense.

Why would you file separately if you could file jointly?

Hat tip to Ryan Waggoner for providing this Quicken post with some solid reasons for married filing jointly, the main financial reason happens to be in the blind spot of my analysis, itemized deductions.

(Photo: Sean Molin Photography)

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312 Responses to “When Does Married Filing Separately Make Sense?”

  1. Pattie says:

    I’m a survivor of domestic violence and abuse and my husband was taken from our home last April 2010. I am a full time student and mom of 4 girls. He is no longer living with us, but both of our names are on the house and he pays child support and some spousal support. We are currently still married, although i have filed divorce papers. I currently receive financial aid because of my money situation and trying to decide whether it is best to file married jointly, or married separately, or head of household? Any suggestions? I can’t loose my aid, and support barely pays the bills. Any help you have would be greatly appreciated!

    • Mike says:

      First, find out what is the minimum requirement for your financial aid package, so that you don’t go over and lose your aid package. Also, how often do they check to see what your status is to change your aid package.

      If you’ve already filed papers and he hasn’t lived there in over 6 months, you would have to file Head of Household + claim the girls on your return. Let him deduct the child support payments from his..

  2. DG says:

    Hi I need some help! I’ve never done taxes before. I’m recently married and i have a baby. My husband makes 54k a year and i only worked 2 months last year (2010) I was pregnant during those 2 months and I’ve been a stay at home mom (living at my mom’s) while my husband’s deployed. Any suggestion on how i should file would be greatly appreciated! Thank you!

    • Mike says:

      You should do married filing jointly. The fact that you were pregnant the 2 months you were pregnant is irrelevant – unless you had the baby last year. Your husband will have to file and there are some armed forces questions on the tax forms that give him some credit. You can read up on the details here : http://www.irs.gov/publications/p3/index.html
      I know its a bit boring, but you can skip the reading if you’re using turbotax or taxcut – the questionnaire guides you thru these.

  3. zimappr says:

    I also want to know if I should file MFS or MFJ. I was married in July, I was unemployed for 6 months without federal withholding tax, so I owe alot from that. My husband made $58,000 and has alot of itemized deductions, which I beleive I can also use the itemized deductions, even when we file separately. Am I right on this? Filing jointly we were only getting $675. But filing separately I was getting $517 back, and he was getting $2289. Does this sound right, or did I screw up somewhere?

    • Mike says:

      Think about it for a sec. If you were using a coupon at a supermarket/dept store, would both you and your husband get the same discount for 1 item? IRS works the same way. Filing separately allows you both to split the deductions if you wish, but not account for it twice.

      Assuming you’ve done your husband’s filing separate & your filing together correctly, you can easily see that he would get $2289 refunded, and your joint is $675. Therefore, your $517 refund would actually become $1614 that you owe.

      $2289 – $675 = $1614.

      Now filing jointly has additional benefits so the amount is not going to be exact but ballpark of what you would owe.

      You could do it 2 ways:
      1 – file joint and use the refund for planning a vacation/something that both of you would be happy about.
      2 – file separate, he gets a bunch of $$$, you owe a bunch of $$$. It wasn’t his fault that you were unemployed and collecting without withholding. So why should he get penalized for his withholdings.

      Personally, I’d pick 1 – plus you’re in the beginning of a marraige and $$$ is the #1 reason for divorce. Rather than have resentment and stupid arguments about money build up, file joint and plan a vacation or cruise with the refund. I remember the arguements I had with my wife when we filed together and she didn’t get anything back that she was used to..so I paid her out of pocket. She felt bad afterwards and we used that money to go away. We still bicker about money, but more about her shopping habits vs tax refunds because the money you save can help you re-kindle your romance when you go away vs a shoe/sweater that stays in the closet for 6 months until the next season arrives.

      My apologies if I ranted and offended you in anyway – I truly didn’t mean to and am bestowing my experience knowledge without your consent.

  4. KHJDC says:

    My parents are retired and receiving SSA benefits. The couple of years they have filed separately. Can they file jointly this year?

    • Mike says:

      Doesn’t matter if they file separate or joint if they’re receiving benefits. It matters if they have any additional income – or other circumstances.

  5. Kylie says:

    My husband has already filed his return as single because we didn’t have the proper proof but we know have the papers and it says we were married on halloweeen so can i still list him as my spouse and file MFS even though he put no one can claim him?

    • Mike says:

      No – if you do, one or both of you will get audited. To avoid the situation, he has to amend his 1040 with a 1040x and re-file (with him saying married filing separate & someone else can claim him as a dependent).

  6. Lisa Bachuss says:

    Not sure if I should file married but sparetely. I made $32,000 this year and my husband made $9,ooo. We have an eleven year old together. We also had to file for bankruptcy twice in 2010. Need your advice. HELP ME PLEASE.

  7. Jeanine says:

    in 2010 my soon to be ex husband took out a full distribution on his 401k $70000 (where he forged my name). I’m a stay at home mom where I don’t have any income for 2010. I don’t want to be held responsible for the large amount of taxes that will be part of the distribution. Can we file married but seperate? If yes then since I have no income of my own for 2010 do I need to file anything myself?

    • Mike says:

      Short answer – Yes, you can file married but separate (as long as both of you agree to it).
      Yes, you still have to even though you had no income – it will just be a ZERO return.

      There are many problems and concerns that need to be addressed.

      1. Why did he have to forge your name on HIS (as you said above) 401K distribution? Shouldn’t have required your signature – not unless he was forging to deposit a distribution check into a joint account.

      2. You are taxed & penalized for early withdrawl from your 401K, so the institution should already have collected the difference and sent him a check for the balance (70K would have yeilded in about a $35K check).

      3. Is the divorce messy or amicable? If messy, too many unknown to even discuss here (You’d need a lawyer and police involved – for the forgery, don’t know the statutes, so I can’t advise).

      4. Is your husband claiming the kids? is he claiming you as a dependent to reduce his tax liability? How much did he earn? If the check was the only source of income for the family, and he is claiming you and kid(s) then he may even get a refund.

      5. What makes you think he already hasn’t filed and you don’t even know about it? If he filed for both of you in the past, then he has all the info need to already have completed this years…

      Assuming you’ve both agreed not to screw each other and you’re agreeing to separate because its just not working.

      He should file joint and claim you and the kids to get the best benefit.

      Part of Bullet #4 should go in here – but again not knowing the details, I put it up in concerns above.

      What you should or shouldn’t get is a matter between you two to decide at that point.

  8. joe says:

    My wife has $155000 AGI and I have $309000 AGI. I have had to use the AMT tax for the past several years. My calculations indicate it is better to file separately. We both pay the AMT. However because my wife’s AMT income does not exceed the AMT deduction, she gets a $36,000 deduction before calculating the tax. Where myself filing separately and filing jointly get 0 deduction.

    Does this make sense or am I missing something?

    • Mike says:

      Its not 0. Form 6251 Instructions on pg 8. says “Note. If Form 6251, line 28, is equal to or more than: $302,300 if single or head of household, $439,800 if married filing jointly or qualifying widow(er), or $219,900 if married filing separately, your exemption is zero. Do not complete this worksheet;

      instead, enter the amount from Form 6251, line 28, on line 30 and Part II—Alternative go to line 31.”

      So you should get the $72K deduction for married. Both of you still have to pay because your salaries as married filing separate or together are over the limits.

      The impact is obviously higher on your salary as it is twice hers..

  9. Hopeful says:

    I am wondering if I should file a joint return or married filing seperate? The situation is my husband owes back child support,we live in a community state. I am wondering what will happen if I file a joint return with the injured spouse form(I make more money than he does),but since community state will it even matter? Will they only look at his earnings or both of us as a whole?

  10. Rich says:

    Hi

    I was unemployed for 8 months last year. My severance was taxed at short term gain rate. Which is better way to file, married separately or married jointly to get a better refund? Also can my wife claim me as a dependent.

    Any advice would be helpful.

    Thanks

    • Mike says:

      Not if you had unemployment income for 8 months. Try using the tool http://www.dinkytown.net/java/Tax1040.html

      and see what rough numbers show. I’d like to re-iterate the point I’ve made several times above – getting a better refund for you doesn’t always mean that your wife will also get the benefit. At the end of the day, both of you have to bear the burden of your tax liability. If you chose to file separately and you may get a better refund than her, but she may end up owing and you’ll have to give the money that you’ve just got back to them. Which is why I always ask – do you have separate finances and like to keep it separate? If so, then it makes sense. Otherwise, filing joint has obvious advantages as indicated in the article above.

  11. Frazzled says:

    Got married this year. Our joint income was about 67K me and 124 him. Married filing jointly has us owing about 2K but if I file separately, I’m getting a 2K refund. Anyone know how I can decide how much each of us should have paid towards the taxes each? Our tax rate was 28% together, but with our deductions, it ended up being about 17%. Also, I have two children that we get to deduct. I’m asking because my tax liability went way up this year if we file together and we keep all of our finances separately, so there is NO financial benefit for me in this marriage and I don’t see a benefit to filing jointly.

    • Mike says:

      If you got married in 2011, then you don’t have to worry about 2010 taxes as filing joint. But if you did get married sometime in 2010 and are debating the issue, then you should see how much he owes when he’s filing separately. Obviously you have the advantage of getting the deductions of the kids on your return.

      Some basics : 67+124 = 191K total
      - 11,600 (married filing joint deduction)
      - 14,800 (2 kids)
      = 164,600 Taxable Income
      Based on this, your total tax liability is $34,158 (28%)

      If you do separately, 67000 – 5800(personal deduction) – 11100 (kids)= $50,100 taxable income with owing $8650. If you paid more than that (combined taxes on w2), that’s your refund.
      His on the other hand 124000 – 5800 = 114,500 with a tax liability of $26,512.

      You add 26512 (his taxes) + 8650 (yours) = 35162 vs combined yours is 34158 = saving you as a couple $1002.

      I’ll say it again – you’ve got options:
      1. Screw him, he makes more money and I have kids to take care of – let him deal with his own taxes and you collect your nice check.
      2. Show him the math and say we both save $1000 and have him agree to file joint + he give you the difference; at the end of the day, you’re more likely to spend it on kids & vacations & other household expenses than lets say head out to vegas for the weekend with the girls..
      3. Figure out another alternative of coming to an agreement because money is one of the most conflicting subjects when it comes to a marriage and spending habits when you two haven’t acclimated to each other’s finances.

      I’d pick Option#2 – good luck with whichever option you choose.

  12. Jane Boyd says:

    I am filing taxes for last year.. 2010.

    Last year I was a full-time student in the spring. Then I got married at the end of September.

    My husband and I were figuring out what to do for taxes and then his mother told us it would greatly benefit her and not harm us at all, if we filed separately. The reason being she could claim my husband (for he was a full-time student and they took out about $50,000 in loans for him) and get a few thousand dollars tax break.

    She said it wouldn’t harm my refund at all (that’s what her tax preparer said) .. but last year I got $1000 extra for an education credit… and now I can’t get that.

    Is there any way around this? She already filed for my husband (married filing separately standard deduction.. not itemized) so now I have to file married filing separately too?

    We were only married for a couple of months last year… but we did live together those last couple of months. I made the majority of the income in those months… though it was only 3,000 …

    • Mike says:

      A bit confused as details aren’t there completely : first, why did you get a $1000 credit in 2009? Did you two file together? You couldn’t have because you said you got married in Sep 2010. Nevermind – re-read it and I see that you were a student in 2010 Spring. You should still be able to get a tax credit for yourself being a student.

      Yes, you do have to file separately because they’ve already claimed him. Doesn’t matter whether you were married on 12/30/10 or 1/1/10 – it has no relevance when it comes to living together or who made more. I assume you don’t have kids together therefore, it doesn’t really change what you’d get back or owe. Its solely based on how much you made, what you paid for school and taxes that were collected.

  13. Mandy says:

    I have been married 7 years and have always filed jointly. In 2010, however I did not receive a w2 from my business and will owe tax on my income. My husband is not owner and has a w2. I was wondering if this year it would benefit us to file seperately. we have 1 child together and own a home.

    • Mike says:

      Does that mean you didn’t earn any income from your business at all? or forgot to submit one and trying to deal with the inevitable by procrastinating?

      Filing jointly has better benefits for you two; but not having enough details I can’t really say…

  14. scott says:

    if i was unemployed and my wife claimed married with 2 allowances should i file married seperate? the estimate we got from filing jointly is around $200. she used a temp place and it messed things up i think, or maybe her filing 2 allowances… some one plz help

    • Mike says:

      Would love to help but without details…were you unemployed the entire year? Did you collect unemployment? or did it run out? I assume when you say 2 allowances, you mean you and your wife as exemptions and not kids in addition to the two of you. Not sure I understand what estimate of $200 means – was the estimate for a refund of $200, were you going to owe $200 or were they asking for $200 to do the taxes for joint return..

  15. seb says:

    My experience (as of 3/20/2011 but still undergoing thesis development) is that MFS is making sense for me and my wife because we live in CA but my job is in NY and I commute more or less every week from SF to NYC. I am going to file as a CA part yr resident and a NY part yr resident, but i need to file my state separately from my wife because she is a full time CA resident.

    we both make over $140K each so we get no roth benefit.

    this may be one reason when MFS is a better option than MFJ…. or atleast until i learn more about this.

    • Mike says:

      Look into details of what NY & CA residency/earnings requirements are first. Either way, you two will get hit with Alternative Minimum Tax. You have to figure out how to lower your tax liability. Do you two own a home together? or is it under one person? Your travel expenses re-imbursed? or not?

      Enter estimates using this tool to figure out what works better :
      http://www.dinkytown.net/java/Tax1040.html

      Plus read what I’ve recommended to others above – it is possible that it may benefit you to file MFS.

  16. graceful3223 says:

    I have been married for 20 yrs. 10 years ago we moved to the country for my husband to start his own business. He makes approx 75,000.00 this last year. I made 35,000.00. We filed our taxes as married filing jointly. When picking up my taxes from the tax office, they stated that i was not having enough taken out of my check. We had to pay in for the first time about 1200.00. They stated that I need to file single w/0 or single and 1. I don’t understand that logic because I am married. We both have seperat checking accounts. He takes care of his bills plus house hold and i take care of my bills, plus groceries and kids. We have only 1 child still living at home and she is 18. I barely make it from pay check to pay check. He now wants me to have my status changed and sd it would be about 3900.00 more a year that would be taken out of my check. When i expressed that I couldn’t afford this, he became very upset with me. Do I need to change my filing status or is it because he makes so much more. Very confused. Please help.

    • Mike says:

      What?!? OK, first I’ll assume you moved 10 years ago to USA for your husband to start his business, correct? In the past 10 years of filing taxes, what have you two been doing? Or is the business a recent startup?

      Now making some assumptions because you’re not sitting in front of me to answer these:
      The IRS W4 form http://www.irs.gov/pub/irs-pdf/fw4.pdf says 1 for yourself, 1 if your married and spouse doesn’t work. But since your husband does, Line B should be 0. 1 for child in line D. Line C – same logic as line B. If you add more, the less the government takes out figuring only one person works in the house, so you get more money in your pocket instead of the government. Leave it at 2 & Married.

      Another quick way to do this : add up all the taxes on your w2 (boxes 2, 4, 6, 17, 19) and divide it by your total wages (box 1). You should get 0.25 – 0.29 (maximum) meaning you’re in the 25 – 29% tax bracket. Any higher means they’re taking out too much and you should get a bigger refund check. If its around 0.10 – 0.15, then they’re taking out too little and you’ll end up owing most likely. These are based on some assumptions I’ve made.

      Without knowing how much loss/gain he has on his business, what you guys file as deductions and other expenses, its hard to guess where and why you’re having this problem.

      But you shouldn’t have to change your status – if you have it at married +2, you shouldn’t owe anything to the IRS, nor would you get something. Now, this changes without knowing what he has on his W4 lines…

  17. alivia says:

    My husband has done our taxes for years and I am certain we could have got back more than we did. He just gets so anxious and upset whenever money is the topic of discussion. This past year, my job ended. I closed the 401k and took a class. He took some of his 401k money to pay off debt. We are now looking at our w2 and such, and he says we owe almost 5200! I almost fell over. I was out of work for 7 months and took a job making alot less than I was. We struggle to make ends meet. An accountant friend is coming over to help me with the taxes. I noticed that our 401k forms show that taxes were taken out already…why would we owe more? Someone suggested we file married but separate. Would that make sense?

    • Mike says:

      You both closed your 401Ks? Yes, they’re taxed and penalized ahead, so you shouldn’t owe anything on those. What was the suggestion of your accountant friend?

      Some basic methods to see what you owe/get back if you will :

      Take a look at this chart :
      http://www.bankrate.com/finance/taxes/2010-tax-bracket-rates.aspx

      Now, assuming you don’t have kids, house, mortgage, etc – just basic returns; add up all the taxes on BOTH of your w2 (boxes 2, 4, 6, 17, 19) and divide it by BOTH of your total wages (box 1). You should get 0.25 (maximum) meaning you’re in the 25% tax bracket. According to the chart if you make anywhere between $68000-$137000, you should only owe 25% in taxes.

      So lets say you both made a total of $80000 (for arguments sake) – then 25% is .25×80000 = $20000 in taxes should be more or less how much the taxes add up to..

      For you to owe $5200, something else must have happened. Somewhere there’s income reported that wasn’t taxed and now you owe. Could be a typo or math mistake when doing it..Hope the easy way to check and make sure you’re atleast in the ball park is helpful…

  18. Renee says:

    Is it possible to file seperate when married after filing joint the first year of marriage?…

  19. Kat says:

    2 months after I married for the first time, my wife left me (we lived in Va – I still live there) and moved to Fla where she got a job. It’s 9 1/2 months since she’s gone and we do not communicate with each other. Should I file with Married, filing seperately status. If I file with Married status, how do I “divide” up any refund received, or what do I do if I owe taxes? No children are involved and we lived in an apartment where I am still currently living

    • Mike says:

      Did you file for divorce? Voluntary separation 6 months – if you can get her to sign off, then the separation can go quick and you can get rid of this hassle..File Married filing Separate. You can’t file Married Joint because you don’t have her w2 to see how much she earns to be able to file it anyways. Let her deal with her own issues. Good luck.

  20. ntbowen says:

    Please help! My husband and I have combined student loans now around 140, 000 (all now consolidated in MY name only). I am currently consolidating again and have explored many repayment options with them as we are having difficulty paying them. It seems as though if I were to file my taxes separately from my husband, I could qualify for a income based repayment plan which would make my student loan payments very low depending on my salary as they will just look at my tax form and not his. He made 140K this year and I made 5000 total. I am currently working from home part time and raising our three children and expect my income to stay relatively low for a long time (probably 30, 000 or less). If I continue to file jointly, my repayment on these loans is very high ($800+) whereas if it is just based on my income, then it is very low (almost null with my current earnings). This could potentially save us $800 per month which is huge for us. I know if I file separately we will lose many other benefits (childcare credit, etc), but I am wondering if you could give me your professional opinion so I can better weigh this decision.

    • Mike says:

      The crux of the issue is to determine where you do end up spending more or saving more.

      1. 800/month = 9600 for the year (in savings). But that doesn’t mean you’re not going to have to continue paying those loans – at some point you will still have to and just understand that you’re still collecting interest while it sits there…what your rate is also a factor. Lets say 3% = 140000 x 0.03 = $4200 interest. Therefore, $9600 – $4200 = $5400 (net savings)

      2. I need to know rough numbers to be able to compare it to something. Without knowing, here’s some sample based on what you’ve said:
      $140,000 earnings (lets leave you out)
      5 exemptions (2 of you + 3 kids)
      11,600 (married joint) + 18500
      = 140000-11600-18500 = 109900
      Mortgage interest?
      Student loan interest?
      Other details?
      You need to have more than $11,600 in deductions to see any benefit.

      Now on $109,900, you should owe about $19,100 in taxes putting you in 13.5%

      If you don’t do this, and file separately – and he files the kids under him, then its
      $140K – $5,800 (MFS exemption) – $14,800 (for kids) = $119,400
      Taxes on this : $28,120 at about 20%

      You saved $5,400 net above but paid lost 10K in taxes and you’re continually adding interest to the total amount owed..

      Obviously, the more detail I have, the more accurate the estimation…

  21. missy says:

    I have a slightly complicated question. My boyfriend has been separated for a long time now, however he is still legally married because the papers where never filed. His tax returns where filed under single, he was estimated to get about $700 in returns, however since he is legally married, his returns have taken on her debt. Now he gets nothing back, and when she files she gets what’s left of the return. We are having a baby in less than a month, he’s working two jobs to make ends meet, and his ex works some part time job at kroger! How can it be possible that she is the one to end up with the rest of the return simply because he filed first? And is there any way to fix this or make himself responsible for only his owed taxes? Or possibly make sure the return is at least split between them two? He called the IRS and they said the reason his return was garnished was because of what she owed. Also, could re-filing cause him to possibly owe? LOOKING for the best solution to a trashy situation lol

    • Mike says:

      First, file the paperwork for divorce.
      Second, IRS doesn’t care where who works and how much they make – just what they owe.
      Third, he should work off the books until this issue is sorted so he doesn’t get *$#@ up the @ss without any lube.
      Last, I’m not sure how he can file single when he’s technically married and the other unknown is what she files it as which screws him over too.

      • missy says:

        thank you lol so lose lose situation we’ve decided to consider his return a lost cause and have been calling constantly to get her to sign the papers…which now of course she refuses to do. we just want to avoid if at all possible this situation next year. thank you mike

  22. Brian says:

    I was married for 3 years (no kids) and we have now been separated for the past year and a half. I make $80k a year. She never worked while we were together but in 2010 when we were separated the whole year she earned $22k. I also purchased a rental property (with money I had before we got married) while we were separated where I made $10k in rental income for the 2010 year. If I file married filing separately I owe about $4k in taxes. If we file jointly than we get $1300 back. She has agreed that we can file jointly since there is a big difference in the outcome and this would help me out. The big question I have is if I file jointly will this look like we have been happily married for the past year and a half? I would like to file the divorce paperwork this year however she does not want to get divorced. I am wondering if it matters in divorce court if we were to file jointly or separately? Would filing taxes come up in divorce court and would filing jointly this year open me up to my soon to be ex wife trying to get money from me in the divorce settlement?

    • Mike says:

      Yes and yes. Divorce court does take a look at your IRS records as well as your pay stubs. Filing jointly though can be argued that since you weren’t legally divorced had to filed as married because the IRS forms don’t have a SEPARATED checkbox. It is irrelevant that you’re separated and may be living in separate homes until the divorce papers are signed.

  23. Verena says:

    Is this going to make sense?

    We got married in 2009 and I had no income for 2009 so I did not claim any taxes or do a return (1st year with green card for K1 visa).

    My husband has a business and has business losses now and also owes a lot of taxes and has a bad credit rating due to his ex partner.

    I work for his business and we both have W2′s from the business.

    We are filing married separate so that when we want to buy a house I have better credit and can (hopefully) get approved without considering the business loss. And my return won’t get taken for his taxes. And hopefully none of my assets or the house would be involved should the corporation go down.

    I had the accountant do it both ways and we are getting a total of 3,000 less but the trade off is we can possibly get a house this way.

    What do you think? Thanks

    PS People should be more kind and understanding to each other. I’ve never heard of someone owing back child support for kids they never knew about, but I’m from Canada and it just wouldn’t happen that way. :) Wouldn’t a good dad pitch in and help anyway and shouldn’t that woman have told him if she wanted him involved? Anyway, not in scope of my question. :)

    • Mike says:

      You are on the right track – better off filing separate and taking a hit. That way, your credit stays free and clear of his and his business, giving you two some breathing room to try and get a house.

  24. jim says:

    I took a loan against my 401k
    now we owe 30,000 in taxes jointly. if we file sep. then We have to tax bills hers is 5000 and mine is 25000 . we can now get 2 separate payment agreements or we could pay off hers and leave her free and clear of my tax liability should i become disabled or bankrupt or pass on.

    I can not understand why all the tax geniouses mis this one. Acountants never take a look at the big picture.

    • Mike says:

      By the same token, when you take out a mortgage its the same issue…the fact that you pass on doesn’t mean your debts are gone..they also get passed on to your next of kin or your will. The liability can be claimed against your estate and they can pursue your debts. Declare bankruptcy would however allow you to walk away free and clear of the debt – ofcourse, you’re screwed for the next 7 yrs.

      Haven’t kept up with the bankruptcy laws – though I recall it had changed a few years ago just before Bush left where I could’ve sworn that you may still be liable..

  25. Upset says:

    My husband owns a business. Every year since we’re married we got a refund, because business had a loss, most years. This year business showed a profit. We owe this year. It is not a lucrative business. In fact we can’t afford to pay what we owe this year. We have always filed jointly. I have nothing to do with business. Work a separate job making about 22,000 a year because of med. insurance premiums. Am I allowed to file separately? If so what are the cons?


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