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Taxes Benefits of Filing Separately When Married

taxes when married

Filing separately can prevent your spouse from learning the details of your finances.

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A married couple can choose to file their federal income tax returns either jointly or separately. Most couples choose to file jointly, and even the IRS warns taxpayers that filing separately is likely to increase their tax bill. Although filing separately carries with it important disadvantages such as limited deductions, you still might end up with a lower tax bill by filing separately. Other considerations might come into play as well.

Limited Liability

When you file jointly, the IRS treats you and your spouse as partners for tax purposes, meaning that each of you is liable for the tax debts of the other. This liability extends to penalties and interest, even if these are the result of an error made

by your spouse. If your spouse cannot pay the tax bill, the IRS has the right to place a lien on your property and even auction it to satisfy the debt. When you file separately, you are responsible only for your own tax debts.

Avoiding the "Marriage Penalty"

When you file a joint return, you must add your spouse's taxable income to yours for the purposes of determining your tax bracket. Although due to legal reforms most couples will not be kicked into a higher tax bracket by filing jointly, a few taxpayers still find themselves paying higher tax rates by filing jointly. A marriage penalty is most likely to occur if your combined taxable income exceeds the cutoff for the 15 percent tax bracket. If you file separately, only your income is included when determining your tax bracket.

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