Tax Myths Married Couples Should Stop Believing

Marriage changes many aspects of your financial life. For many, it means having two incomes in the home, making it easier to afford life’s many expenses. However, that’s not the only change that occurs. Marriage also changes how you file your taxes. Unfortunately, there are plenty of misconceptions about joint tax returns, filing status, and each spouse’s responsibilities. These misconceptions often lead to tax issues for newly married couples. Understanding the facts can help couples make informed decisions, avoid costly mistakes, and reduce the risk of unexpected tax issues. Let’s take a look at some of these myths and see if we can’t dispel them.

Myth #1: Getting Married Always Lowers Your Taxes

One thing you always hear is that getting married will lower your taxes. While for many couples this is true, it is not always the case. There are many factors that go into determining how much you are taxed. These include income, deductions, credits, and filing status. For example, if two people who earn similar, high incomes get married, it is actually likely that their combined income will push them into a higher tax bracket than they were in previously, resulting in them owing more in taxes. To ensure that marriage will lower your tax bill, calculations will need to be run using numbers and information from your specific situation.

Myth #2: One Spouse Can Handle the Taxes Without the Other’s Involvement

Most couples don’t work together on everything. Instead, they divide up responsibilities. For example, one spouse may handle all yard work while the other handles interior maintenance. Tax preparation is often one of these responsibilities that falls on one spouse’s shoulders. While it is ok to do this, it doesn’t mean the other spouse shouldn’t be involved at all. Everyone should have an understanding of their taxes and their financial situation. Best practice is to review the completed return together before signing. This will give both spouses the chance to look it over for any mistakes, which if left unnoticed, could end up costing you thousands of dollars.

Myth #3: If My Spouse Made the Mistake, I’m Automatically Off the Hook

People think that if the other spouse makes a mistake regarding taxes, they themselves will not face any consequences. This isn’t always true. You see, spouses who file jointly share responsibility for the tax return, meaning that you can be held liable for a mistake your spouse makes. However, there is a way to protect the innocent spouse. It is called innocent spouse relief, which is an IRS provision that excuses you from paying additional taxes, penalties, and interest if your spouse or former spouse improperly reported items or omitted income on your joint tax return.

Myth #4: Divorce Automatically Eliminates Joint Tax Responsibility

Divorce ends a marriage, but it doesn’t automatically sever all ties. It is true that after divorce you will not need to file taxes jointly anymore. However, you will still be responsible for issues related to previously filed joint tax returns. For example, if you owe back taxes on a jointly filed return, divorce will not get rid of your obligation to pay those back taxes with your former spouse. For this reason, it is best to address any outstanding tax matters during the divorce process.

Myth #5: The IRS Only Contacts People Who Did Something Wrong

This myth does not only apply to married couples, but it is so prevalent that it is absolutely worth mentioning in this list. Just about everyone panics when the IRS contacts them. They think that the IRS would only reach out if they have made a costly mistake on their taxes. This just isn’t true. The IRS contacts people for a plethora of other reasons, including requests for additional information, account changes, and payment reminders. So, if you receive an IRS notice, don’t panic. Instead, open the notice and read it carefully before you begin jumping to conclusions.

Myth #6: Keeping Separate Bank Accounts Means Separate Tax Responsibility

Having separate bank accounts has no bearing on filing status. The IRS does not care how day-to-day finances are handled by a couple. It is completely possible and legal to keep your day-to-day finances separate and still file a joint tax return. If desired, you are also allowed to file separately using married filing separately status. The only thing you are not allowed to do as a married couple is file as single status.

Myth #7: Professional Tax Help Is Only for Complicated Situations

Professional tax help is by no means solely for complicated situations. Almost every married couple, and even single people, can benefit from the help of a tax professional. They can help identify planning opportunities, explain filing options, and address questions before they become larger problems.