Do I Have to File Taxes with My Spouse if We Are Separated?

Filling out a tax form and unsure of the status to file under - visual concept for legal blog

A divorce can take several months or even years to finalize, depending on the complexity of the issues in your case. If you are in the process of divorce and physically separated, you may be wondering, “if I am separated, how do I file taxes?” While many people default to doing what they’ve done during their marriage, such as filing a joint tax return, it’s crucial to understand that other options may exist*.

What are Your Options to File Taxes if You’re Still Legally Married at the End of the Year?

While we are not accountants and cannot offer specific tax advice, what tax filing status should I choose is a question we frequently receive this time of year. The answer will depend upon your marital status as of December 31 of a particular tax year. For the purposes of the Internal Revenue Service (IRS), you are considered married for the entire year, if by December 31 you have no divorce decree or separate maintenance decree in place at that time. Even if you have lived apart the whole year, you will not be eligible to file as “single” unless you have an agreement that complies with IRS requirements.

If you’re legally married at the end of the year, you must file as “married” for that tax year and choose one of the following filing statuses:

  • Married filing jointly — On a joint tax return, you report your combined income and deduct your combined allowable expenses. In many cases, by using the married filing jointly status, you can lower your tax burden. Under very specific circumstances, you might even be relieved from liability for taxes that are owed on a joint return through tax relief for spouses.
  • Married filing separately — If you file a separate tax return from your spouse, you will report your own income, deductions, and credits on your own individual return. You will be responsible only for the tax that is due on your specific return.
  • Head of household — In the event you’re still married or legally separated at the end of the year, you or your spouse may be eligible to file as head of household if your spouse did not live in the home for the last six months; you paid more than half the cost of keeping up your home for the year; and your home was the primary residence of your dependent child for more than half the year.

Importantly, the parent who has custody of a child can claim them on their tax return. If parents share custody 50-50 and are not filing a joint tax return, they will have to decide between themselves who will claim the child.

Should You File Jointly or Separately?

It’s crucial to consider the implications of filing jointly versus separately and the impact it may have on your situation. Notably, your income tax filing status affects the rate at which you are taxed and determines which tax credits you may be eligible for. While filing a joint tax return can often result in lower tax liability than filing separately, you must carefully consider whether there are financial benefits in doing so. The IRS advises taxpayers to calculate their tax liability under both scenarios to determine which is more advantageous. The tax planning software used by most accountants will automatically generate this comparison.

For tax year 2023, married taxpayers filing separately can get a standard deduction of $13,850. By contrast, joint filers can take a $27,700 standard deduction. Joint filers may also be able to qualify for several tax credits, including the Earned Income Tax Credit (EITC) and the Child and Dependent Care Tax Credit.

What are the Benefits and Drawbacks of Filing Jointly?

Although having a lower tax bill is desirable, it shouldn’t be the only consideration when it comes to deciding whether to file jointly or separately. If you are separated, how you file taxes can depend on your relationship with your soon-to-be ex-spouse and your respective financial situations. When you file a joint tax return, you are jointly responsible for any taxes due, penalties that have been incurred, and interest that has accrued. This means that if your spouse avoids responsibility for paying the tax bill, you could be liable for paying the whole thing — if this is a possibility, it may be best to file separately.

If your spouse has taken certain actions throughout the tax year — such as taking untaxed distributions from a retirement account or under-withholding their income, there may be additional taxes owed. In such cases, your tax bill might be higher, but probably not as high as the tax bill for both of you. In the event your spouse misreports their income, wrongly claimed tax breaks, or did not pay their share of taxes — and you did not have knowledge of the error — you might be eligible from relief for their debt by filing a Request for Innocent Spouse Relief (Form 8857).

Depending on your circumstances, there may be several other things to think about when deciding whether to file jointly or separately. For instance, you might not be able to take a deduction for student loan interest if you are married and file separately. You may also be limited to a smaller deduction for contributions to individual retirement accounts (IRAs). If being able to deduct capital losses is important to you, it’s essential to be aware that on a separate return, you may only be able to deduct $1,500, rather than the $3,000 that is permitted on a joint return.

When is it Best to File Separately?

If you are separated, how you file taxes can depend upon a number of factors. There are a number of scenarios in which filing separately may provide a financial benefit. For example, if one spouse, particularly the lower-earning spouse, had a substantial amount of out-of-pocket medical expenses during the tax year, more may be deducted by filing separately. Your ability to deduct medical expenses is a function of your adjusted gross income (AGI) — and you may only be able to deduct those expenses that exceed 7.5% of your AGI. With a lower AGI, the threshold at which you can begin to deduct medical expenses would also be lower.

Generally, if your spouse’s financial situation creates a liability for you, it may be best to file your taxes separately. It’s a good idea to consult with a tax attorney or tax preparer who can best advise you regarding your options and help you determine what tax filing status is most advantageous for you.

Contact an Experienced Maryland Divorce Attorney

If you are separated, how you file taxes can have a significant impact on your financial situation. It’s vital to discuss the pros and cons with an experienced attorney and a tax professional to help ensure you understand your options and make a decision that will be in your best interests. At the Law Office of Shelly M. Ingram, our Fulton, Maryland divorce lawyers are committed to protecting our clients’ legal and financial interests. Trained in collaborative divorce, mediation, and traditional divorce litigation strategies, we will work to help you obtain the best possible outcome in your case. To schedule a confidential consultation with an experienced Maple Lawn divorce attorney, call us at (301) 658-7354 or contact us online.

You may also be interested in:

Managing Unexpected Expenses in Divorce

What is Income for Child Support Purposes?

*The Law Office of Shelly M. Ingram hopes you find this article to be a helpful starting point for questions that you may have about your tax filing options. The Law Office of Shelly M. Ingram, LLC is not an accounting firm and cannot offer any tax advice or legal advice on matters related to tax law. The law and the IRS regulations change regularly and the outcome of any legal matter depends on its unique circumstances. If you need specific advice regarding tax law, please consult a tax attorney or an accountant.

Categories: Finances & Taxes