Message Font: Serif | Sans-Serif
No. of Recommendations: 0
<<In this instance, FS 3 allows for a lower tax bracket especially if the two incomes are widely disparate. One
spouse will be taxed in one bracket while the other spouse will be taxed in, usually, a lower bracket.

Actually MFJ may be to your advantage with disparate incomes, because when incomes are combined the
deduction is taken off the top and thus reduces income in the highest tax bracket. But if you file MFS 1/2 of
your deduction will go to low-taxed income.>>

I realize that this is the common thinking...but it's just not true.

First, if you live in a community property state, the married-separate status is virtually worthless. You are required to split the community income down the middle, with each spouse reporting his/her shares. So in effect, there will be no "lower" bracket for either of them.

Even in separate property states, there can still be what is called joint or community income, which would then follow the same rules.

And even if you are in a completely separate property state, many of the hazards of using the married-separate filing status are not overcome by the potential tax savings. In reality, it's just not there.

About the only people who use the married separate status are those in very specific and unique circumstances, or simply don't understand how the law really works.

Again, I explain this in much more detail in my series of articles in the Taxes FAQ area. You might want to take the time to read them.

TMF Taxes
Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.