Legal Definitions - separate return

A separate return refers to a tax filing status where each individual, typically a married person, files their own income tax return independently. When filing a separate return, each spouse reports only their own income, deductions, credits, and tax liability, rather than combining their financial information on a single tax form, which is characteristic of a "joint return." This option allows married individuals to maintain distinct financial and tax responsibilities.

• Example 1: Avoiding Joint Liability

  Sarah and Michael are married, but Michael has a history of complex investments and has faced tax audits in previous years. Sarah, who has a stable salary from her employer, is concerned about being held responsible for any potential tax discrepancies or unpaid taxes related to Michael's financial activities. To protect her own finances and avoid joint liability, Sarah chooses to file a separate return.

  Explanation: By filing a separate return, Sarah reports only her income and claims her own deductions and credits. This ensures that she is not legally responsible for any errors, underpayments, or audit outcomes related to Michael's separate tax return, which would be the case if they had filed a joint return.

• Example 2: Strategic Tax Benefits

  David and Emily are married. David incurred significant unreimbursed medical expenses during the year, while Emily has a high income. They discover that certain medical expense deductions are only allowed if they exceed a specific percentage of their Adjusted Gross Income (AGI). If they file jointly, Emily's high income would make it difficult to meet this threshold. However, if David files separately, his individual AGI is much lower, allowing a greater portion of his medical expenses to be deductible.

  Explanation: This scenario illustrates how filing separate returns can sometimes be a strategic choice. By filing separately, David can potentially claim a larger deduction for his medical expenses because the income threshold for deductibility is applied to his individual, lower AGI, rather than their combined, higher AGI on a joint return.

• Example 3: Marital Separation or Discord

  Maria and Carlos are legally married but have been living apart for several months due to marital difficulties and are contemplating divorce. Although they are still legally married, they no longer share finances or wish to be financially intertwined. They decide that each will file a separate return for the current tax year.

  Explanation: Even when legally married, individuals experiencing separation or marital discord may choose to file separate returns. This allows each spouse to manage their own tax obligations independently, reflecting their separate financial lives and avoiding the need to cooperate on a joint return or be held responsible for the other's financial disclosures during a period of marital strain.