We are separated. How should we file our tax return?

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Q. My husband and I have been married for four years and we always filed married when doing our taxes. This March 2020 we have separated financially and I moved out. I started a new job this week. How should we file our taxes for 2020 next year?
— Still married

A. You have several choices and the best decision will be based on the specifics of your finances.

Based on the information provided, your options would be to file “married filing jointly” or “married filing separately.”

Living separate and apart would not necessarily preclude spouses from either filing status, said Thomas Roberto, a family law attorney with Adinolfi, Lieberman, Burick, Falkenstein, Roberto & Molotsky in Haddonfield.

For tax purposes, it does not matter if spouses are living separately unless there is a court order formally dissolving the marriage, he said.

Under IRS rules, spouses are still considered married if their divorce is not finalized by Dec. 31 of a given year, he said. This is the case even if one spouse filed for divorce prior to Dec. 31.

“If, however, a divorce is finalized — a court has issued a judgment of divorce dissolving the marriage — on or before Dec. 31, then a married tax filing status would not be available and each spouse would instead need to file as `single’ or `head of household,’” he said.

Roberto said many couples, even those on the verge of divorce, find it is more advantageous to file married filing jointly. That is, however, a fact specific determination and depends on the circumstances of each case/couple, he said.

Those facts include, but are not limited to, the income, withholdings and tax debts of each spouse. In general, the married filing jointly status often makes spouses eligible for a higher standard deduction as their incomes are combined on a single return, Roberto said.

“Keep in mind, however, that spouses to a joint tax return are generally jointly and severally liable for all taxes due,” he said. “This could result in one spouse being made responsible for a portion of the other spouse’s tax debt, which may not be the case if they filed separately.”

Consulting with a tax professional is always advisable in order to determine which filing status makes the most financial sense for each individual taxpayer.

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This story was originally published on Nov. 20, 2020.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.