Homework Question on Tax Consequences
- Contrast the tax consequences resulting from the following filing status situations:
- Married filing jointly versus married filing separately.
- Married filing separately versus single filing separately.
- Married filing separately versus abandoned spouse status.
Homework Answer on Tax Consequences
Married filing jointly versus married filing separately
It always costs more when married couples file their taxes separately and it costs the couples twice the rate of those couples who file jointly. This means that the taxes will always be higher for couples filing separately, than it would if they filed jointly. Unlike filing jointly, couples filing separately have deductions that are subject to a percentage of income from the individuals. Filing jointly also subjects the couples to liability in case even in instances of divorce later, unless one qualifies for innocent spouse relief.
Filing jointly risks a spouse by incurring liabilities such as financial debts in the form of loans and unpaid taxes and supplementary financial commitments, while filing separately gets a spouse of the hook of such expenses and costs.
Married filing separately versus single filing separately
In a married filing separately, the couples have their taxes paid with regard to the percentages of each individual’s income and are eligible to marriage tax penalties. Single filling separately incurs high taxes as well, but the difference between these two is that the single filer is not tied to any marriage and can’t incur marriage tax penalties in that status.
Married filing separately versus abandoned spouse status
Married filing separately means that the partners are in a marital relationship, but have chosen to file tax separately, while the abandoned spouse status means that the partners have separated, and allows an individual taxpayer, who has been abandoned by their spouse to file as the head of the household. The law` allows the married filing separately taxpayer to be at liberty of choosing whether to shift to married filing jointly but the law `restrict the abandoned spouse from shifting to any other tax provision.