Most married couples file joint federal income tax returns. This is because the overall tax liability is usually less under this method as opposed to each spouse filing on a married filing separate basis.
In general, in order to qualify for joint filing for a particular tax year, a couple must be married as of the end of that tax year. This means that if your divorce will not be finalized until the next year, you can typically file a joint federal income tax return for this year.
But should you? Before you rush ahead and simply file jointly to save taxes, you should also fully understand a risk that is associated with filing jointly.
When a married couple files a joint federal income tax return, each spouse has joint and several liability for that particular tax year. This means that if there is an underpayment of tax, the IRS can try to collect it (along with any applicable interest and penalties) from either spouse, even if only one spouse was at fault for the underpayment. In addition, divorce has no effect on this joint and several liability. Both spouses remain liable for the total amount owed, even if a divorce judgment assigns the obligation to only one of the spouses.
In some situations, the potential tax savings of filing jointly may not be worth this risk. Before filing jointly, you need to be comfortable your future ex-spouse is not doing things like under-reporting taxable income, taking too many deductions, or not making enough withholding or estimated tax payments. The risk of tax underpayments caused by one reason or another can increase if there is a closely-held business involved, or if one spouse totally controls a couple’s financial matters and financial decisions.
If you have any concerns about filing joint federal income tax returns while your divorce is not finalized, you should strongly consider seeking the help of a tax advisor.