We’re separated. Should we still file our tax returns together?

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Q. I am married, but separated. I make $42,000 a year but pay my own health expenses, Medicare, dental, etc. Am I better off filing separately so whatever refund I get, I know is mine? Typically we file as married and split the refund but because I earn more and I’m paying more for my own medical, I want my fair share. He earns $28,000.
— Separated

A. There are many reasons why it may be more advantageous for a couple — separated or not — to file taxes separately.

Bernie Kiely, a certified financial planner and certified public accountant with Kiely Capital Management in Morristown, ran some numbers to see if there would be a difference in tax depending on how you filed.

Because you are on Medicare, it means you are at least 65 years old and would be eligible for a $13,500 standard deduction, Kiely said. If you both filed separately, your federal tax would be $3,229 and your husband’s would be $1,549, for a total of $4,778 If you filed jointly, your combined tax would be $4,775. The penalty for filing separately is only $3, which is not large enough to make a difference, he said.

He said there could be other benefits to filing separately.

“If you file jointly, both you and your husband are jointly and severally liable for 100% of what’s on or should be on the tax return,” Kiely said. “That means if either of you underreport income or mis-report deductions, the IRS can go after both of you (joint) or only one of you (several), even if it was the other spouse’s problem.”

Kiely said he’s assuming you don’t live together. In that case, by filing separately, you can file your return without waiting for the other.

“Sometimes one spouse gets their affairs in order quickly while the other procrastinates and files for an extension,” he said. “Filing separately, you file when you are ready. I say file separately.”

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This story was originally published on Nov. 9, 2020.

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