A Florida couple with significant assets might rely on tax experts to determine the best approach to filing federal tax returns. However, those who prepare their own taxes might wonder if filing separately has any advantages over filing jointly. Married couples, including same-sex couples, must use one of these two designations. Meanwhile, those who are in domestic partnerships or civil unions may not use these designations when filing. In most cases, there is a greater financial benefit in filing jointly.
Joint filing allows couples to take advantage of higher tax thresholds as well as various tax credits. Earned income credit, education credits, and credits for disability or age are not available when selecting married filing separately. Child tax credits are still available, but the value is reduced significantly when filing separately. Both spouses must use the same option in terms of itemizing or using the standard deduction if filing separately. Additionally, there is a greater possibility of having to pay the alternative minimum tax when filing separately.
If spouses have significant differences in income levels, separate filings might allow the one with a lower income to claim medical expenses. Separate filing might be advisable if one’s spouse is using tax practices that are questionable since a joint filing would obligate both parties to pay related penalties. Those who are in the process of divorcing might also find separate tax filings to be advantageous. If a divorce does not finalize prior to the last day of the tax year, the couple would still be considered married for tax purposes.
In going through the divorce process, a client might provide financial information to professionals at a Hillsborough County High Asset Divorce Firm for review related to matters such as property division and child support. Tax concerns might also be addressed in light of any consequences that could result from the receipt of certain assets.