As a general rule, married couples filing their income tax returns jointly instead of separately might be able to reduce their federal tax obligation. Minnesota couples might also save on the taxes they owe to the state. There could, however, be other factors, such as an impending divorce, that might weigh heavily in favor of filing separately and should be taken into consideration when making the decision.
Federal tax rules permit couples to file jointly even though a divorce action has been started. Two people may file jointly for a particular tax year as long as they were still married on the final day of that year. In other words, a married couple could file jointly even though they have completed all disclosure requirements of their divorce and agreed upon the division of pensions and retirement plans in their divorce action. The factor determining whether the tax laws treat them as a married couple is the date that the divorce decree is entered.
Tax benefits of filing jointly include maximization of standard deductions and credits, minimizing the amount paid toward the alternative minimum tax and paying taxes at lower rates than those individuals who file separately. The financial benefits of filing jointly might be outweighed by the risks associated with filing a joint tax return with a spouse who has engaged in illegal or fraudulent practices that will become part of the return filed by the couple. Signing the joint return could make the innocent spouse responsible for the penalties and other consequences associated with the return.
Married couples in the midst of a high asset divorce might find it easier to file separate tax returns. The work done by the attorneys on behalf of each of the parties to arrive at a complex asset division could make it easier to transition from filing joint tax returns to filing separately.