S. Preston Douglas & Associates, LLP

Is Filing Jointly Always a Good Idea for Married Taxpayers?

We receive this question several times per year from married people.

Former S. Preston Douglas & Associates, LLP partner Joe Lineberry (1953-2001) used to have a saying he was fond of. He’d say, “I’m not going to file taxes with someone that I can’t live with!”. And we feel this advice still holds true.

In most cases for married couples, its best for them to file Married-Filing Jointly tax wise. However, there may be circumstances where filing jointly may not be the best idea. For example, the husband may be involved in suspicious business dealings and the wife may have doubts as to whether he is reporting all his income. The wife may want to file separately to protect herself. Often married couples in 2nd marriages will want to file separately to keep their financial affairs separately.

As taxpayers get ready for the upcoming filing season, let's take a closer look at different filing status options. The following information is an excerpt from our February 2023 Tax Newsletter that can be found here.

Taxpayers can choose from five different filing statuses when filing their returns:

Single. Normally, this status is for taxpayers who are unmarried, divorced, or legally separated under a divorce or separate maintenance decree governed by state law.
Married filing jointly. A taxpayer can file a joint tax return with their spouse if a taxpayer is married. When a spouse passes away, the widowed spouse can usually file a joint return for that year.
Married filing separately. Married couples can choose to file separate tax returns. Doing so may result in less tax owed than filing a joint tax return in some instances
Head of household. Unmarried taxpayers may be able to file using this status, but special rules apply. For example, the taxpayer must have paid more than half the cost of keeping up a home for themselves and a qualifying person living in the home for half the year.
Qualifying widow(er) with dependent child. This status may apply to a taxpayer if their spouse died during one of the previous two years and they have a dependent child. Other conditions also apply.

When preparing and filing a tax return, filing status affects:

If the taxpayer is required to file a federal tax return
If they should file a return to receive a refund
Their standard deduction amount
If they can claim certain credits
The amount of tax they should pay

Filing status generally depends on the taxpayer's marital status as of December 31 of the filing tax year (e.g., 2022). More than one filing status may apply in certain situations. If this is the case, taxpayers can usually choose the filing status that allows them to pay the least amount of tax.

Not sure which filing status you should use this year? Help is just a phone call away.

Lee Grissom, CPA, CFE, CISA, is a Partner at the accounting firm, S. Preston Douglas & Associates, LLP. In business for over 80 years and with three office locations, SPD&A offers a wide array of individual and business services in both North and South Carolina. You can contact Lee directly at (910) 739-7523 ext. 307 or by email at lgrissom@spdouglas.com. To learn more about our firm, please visit www.SPDouglas.com.