Filing Status

So, I’m doing some ‘fun’ reading on Yahoo today (9/2/15) and I come across an article about tax filing status labelled: “Top Reasons to File Separately When Married” – so I click on the link and it goes on to paraphrase the IRS publication 501.  Oh, and they also quote from Turbo Tax (if you don’t know how I feel about Turbo Tax, you haven’t been reading my posts) – so I suppose they can claim it isn’t plagiarism – since it comes from two sources.

Any way, the article is about choosing the right filing status when you are married and living together.  An explanation for those who try to stay as un-involved in the preparation of their income taxes as possible, there are two choices of filing status for those of us living with our spouses: Married Filing Jointly (MFJ) and Married Filing Separately (MFS) – and most folks choose the filing status of MFJ, since it has a lower tax rate and a few other ‘perks’ – but how do you know which is best?  Well, the IRS suggests (and Yahoo, still quoting from Pub 501 agrees) that to be sure you need to figure your taxes both ways.  Now, here is where I have a problem controlling my laughter.  I can see someone doing their own taxes online or on their home computer with Turbo Tax (or any other tax software for that matter) and finally finishing up at 1:00 am, after consuming a bottle of wine in an effort to control their stress at how bad their record keeping was the year before, to then say – ‘OK, now I need to re-do everything and change our filing status to MFS to see if that saves us $5!’  SURE!

How about you folks who go into one of the national ‘big box tax mills’?  After having sat in the world’s most uncomfortable chairs trying to control your children who are doing everything they can to get your attention because they are: bored, hungry, need to use the restroom, or simply being children (we’ve all been there) for what seems like 24 hours, when the preparer looks up from their computer screen and proclaims ‘I’m done’ – are you really going to say ‘oh, hey, I’ve got a few extra hours today, how about comparing how we would do if you changed our filing status from MFJ to MFS?’ – sure you are!  And can you then imagine what they are going to say?  If they have a lot of self-control they may say that they have been doing taxes for so long, they just know which filing status is best for their clients.  Sure they do!  And you trust them, right?  Because someone you see once a year for a couple hours obviously has your best interest at heart, and would never dream of wanting to hustle you through to make room for someone else; even though they make more money the faster they can do a tax return, particularly since they only work 3 1/2 months a year.  No, speed isn’t the most important thing to them – you are!  That’s why if they thought for even one moment that you might do better with a filing status of MFS rather than MFJ they would have checked without you asking – sure they would!

Quick, what is their last name?  Right – you don’t know their last name but you trust them to know what’s best for you financially.

Talk to a professional – an Enrolled Agent or CPA, preferably in the ‘off season’ and ask them to check over your last year’s tax return, paying particular attention to the filing status.  IF they care about you as a client or prospective client, they won’t have a problem with it.  If they do object, find one who will check to make sure you filed correctly.  Oh, and for the record, there are things I look for in a return that help me decide if I should be checking the filing status of my clients without them asking, and I have no problem checking if they do ask, or even mention any concern they have about having the right filing status.

The final word for me on this subject: you should be satisfied that your taxes were done right, your filing status was chosen as the best because it was compared with the other possibilities, and that your tax preparer wants you to be happy with the results and understand why the results were what they were.  If your tax preparer doesn’t spend 15 minutes (minimum) going over your taxes with you – you may be signing an official statement that could cost you a lot of money unnecessarily.  Know/Understand what you are signing before you sign it!  Be happy or don’t pay – you wouldn’t pay for a meal that wasn’t edible – why pay for taxes that aren’t done right?